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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: velociraptor_ who wrote (22230)	10/21/2001 9:33:59 PM
From: Louis V. Lambrecht	Read Replies (2) \| Respond to of 52237

Dear Flabbergasted <vbg> if the government is involved in market manipulation well, well, you haven't read the gata.org Howe Lawsuit yet I presume? <g> Notional short of the 4 major bullions banks close to $90 trillion Greenspan, O'Neill Press For Derivatives Insolvency Law news.ino.com which would allow dealers to net positions of their clients in case of insolvency. This is the swap industry: notional $90 trillion Te Butler's gold-eagle.com warnings on Silver. All in all, the danger in (I have to say "unsecured") derivatives is close to a notional of $200 trillion (to be compared with a total world's GDP of $41 trillion). Frightening numbers. That's only the visible part of the iceberg. gold-eagle.com Once any of the Shorts decide to cover, the fun begins, because Mr. Short now has to cover ten ounces of silver with only one available. This is why as Mr. Butler has pointed out so many times the "leasing of metals" is Fraudulent. The Lessor moved the metal to someone who sold it into the market and now the fact is the metal is gone forever! What price will silver have to reach when the panic starts? How are the loans going to be paid back? How do so few ounces of physical cover over one billion ounces that have been loaned out over the past decade? I do not have a concise answer, however recent history in the palladium market does give us some clues. First who ever heard of having to put up margin at two or three times the cash (fully paid ) position? Well, check the rule changes in palladium recently. Look at how the CFTC can change the rules to suit their needs. To stop delivery of a commodity contract held by a long is against everything the free market stands for. In fact any silver bulls as old as me will remember the CFTC rule change in 1980, when the Hunt's had cornered the silver market. Only sell orders were permitted! The commodities exchange will do everything in its power to deny delivery to the longs. This can be verified by recent history, again look at the palladium market. That is the freightening part.

To: velociraptor_ who wrote (22230)	10/21/2001 10:55:32 PM
From: Steve Lee	Read Replies (1) \| Respond to of 52237

While that essay involves some truly large numbers, the author fails to justify the alarm he is trying to convey. The fourth from last paragraph, IMO, contains the essence of the point being made. I quote: "We believe that JPM’s management is taking a mammoth gamble with the wealth of its shareholders by supporting derivatives with a notional value of over $26 TRILLION dollars with a relatively trifling $42 billion of shareholder equity. Any discontinuous market volatility event that is unforeseen and beyond JPM management’s control could conceivably cause this immense pyramid to rapidly unwind, utterly annihilating the company’s capital in a matter of days or weeks." However, the piece fails to go into specifics of the mechanics of what type of unforeseen event could cause the calamity. This is a blatant omission considering the length of the article and the repetition of the high risk. Without breaking down the exact nature (rather than categories) of the derivatives held, the assertion of a potential calamity cannot be justified. Merely repeating the emphasis on large numbers and high ratios does not win any cigar from me. Here is an example of how leverage does not necessarily equate to high risk. As of Friday's prices, I could have bought a Nov $75 put contract on IBM for $25. My total risk would be $25. But I can make a large number out of this by pointing out that the contract controls 100 shares of IBM valued currently at $102.65 each. So the notional value implied by the put contract is $10,265. To follow the essay's logic, I would say "Oh my God, the notional value of that put contract is $10,265, what a high risk". Of course, that is alarmist. The risk involved is precisely $25. The $10,265 amount is an irrelevant fictitious amount, and the relevance of the essay's notional values in the tens of trillions is not proven by the logic in that essay. I don't dispute that a calamity may be caused by JPM's holdings - I'm just saying the essay does not put forth evidence that can lead you to that conclusion. Might the author have a gripe or an ulterior motive, or is there something I am not understanding?