Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Bilow who wrote (82731)	8/8/2000 12:13:32 AM
From: pater tenebrarum	Read Replies (2) \| Respond to of 132070

i know..the investment trusts issued a lot of debt-like instruments in order to increase the leverage of their common shares to the stock market. should ever net redemptions hit the mutual fund industry of today, you'll get modern mutual funds on margin as well...they will use their credit lines to pay the money out instead of selling shares at first. the Magellan fund holds only 1,6% of its assets in cash for instance... in many ways the excesses of today are worse than those of the '20's...while regulatory oversight has clearly improved, the complexity of the leverage in the system has as well. one needs only to look back at the LTCM debacle - a single hedge fund was deemed to pose systemic risk if it were to collapse. the solution to the frequent crises of the '90's was to increase the mountain of debt, and print ever more money - money supply growth rates and credit growth rates surpassed economic growth throughout the decade. the result is a monstrous pyramid...and i expect it to be put to the test at some point. hb