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To: Zeev Hed who wrote (75688)	4/22/2001 5:23:34 PM
From: Crimson Ghost	Read Replies (2) \| Respond to of 99985

Is not Haim talking about changing the margin requirements on derivatives?

To: Zeev Hed who wrote (75688)	4/22/2001 5:31:34 PM
From: Haim R. Branisteanu	Respond to of 99985

Zeev, the existence of the derivative markets is a direct result of low margin requirement from financial institutions. Not for those low margin the derivatives would not be economically justified, and may be,... the beast is so enormous that tackling the margin requirements will collapse the derivative markets. But as all scary things one must confront them and the derivatives market are way way out of line to the underlying financial instruments. Haim

To: Zeev Hed who wrote (75688)	4/23/2001 1:41:28 AM
From: JGoren	Respond to of 99985

AG has testified before Congress that changes in margin requirements affect disproportionately a small number of people and do not affect the overall economy as much as monetary policy. That is why they are not used anymore. I think changing margin requirements is a bad way to institute monetary policy because of the disproportionate affect on a few people; plus they cause quick changes and the loss falls on a few and causes a disproportionate affect on the stock market.

To: Zeev Hed who wrote (75688)	4/23/2001 11:25:13 AM
From: Doug	Respond to of 99985

Zeev: An increase of Money supply is known to be a cause of a stock Market bubble. The weallth effect from the stock market results in a 0.75% increase in Consumer spending for 10% gain in the market. Unfortunatley both parameters are disconnected from earnings when the Money supply is increased and this in some ways leads to a bubble. Since margin restsrictons have been made less effective due to heavy derivative trading, is there a need for the Fed to regulate the money supply in a less drastic manner.?