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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Nancy who wrote (65145)	12/23/2000 10:28:17 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 99985

A rate cut will not solve the energy crisis in CA, but if indeed there are $120 B (as was mentioned, but which I doubt) of possible "endangered" debt, then that will percolate very hard through the banking system and the financial system. This money is owed to some institutions (or people) and these institutions owe money to other bodies, if this "colateral" are taken away or taken to money heaven, then the problem becomes much larger. By lowering rapidly interest rates and increasing the money supply in the system, some of these problems can be cushioned. In the case of Continental (as well as Chrysler and Lockheed), there was a solid case to be made that the money would be repaid, but if these CA problems run for much longer, there is little hope that these debt will be repaid, and senior debt holders will fight like hell to get their money out, leaving junior debt in the lurch, possibly plunging these outfits into CH 11 or worse, into CH 7. By the way, there was a big outcry in troth cases of government interference, and with a Bush administration at the helm, such an intervention is not even thinkable. Zeev