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Non-Tech : Derivatives: Darth Vader's Revenge -- Ignore unavailable to you. Want to Upgrade?

To: Henry Volquardsen who wrote (1037)	12/16/2001 9:56:00 AM
From: Worswick	Read Replies (1) \| Respond to of 2794

Henry, my friend, I trust you are well. I must say I am dazzled, personally, that everyone in derivative-land standing around the circle haven't taken their hands out of their pockets... to see what's there. I trust you are retired and out of the frenzy. I can not resist posting this... about, ah- you guessed, ENRON! Enron Venture Capitalism You have two cows. You sell three of them to your publicly listed company, using letters of credit issued by your brother-in-law at the bank, you then execute a debt/equity swap with an affiliate LLC so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman Island company secretly owned by the majority shareholder, who sells the rights to all seven cows back to your listed company. Now to the best part.... The annual report says the company owns eight cows, with an option on one more. In other news, the Enron debacle continues to unfold. Andersen, the company 's auditor admitted to mistakes in doing the energy trader's books but blamed Enron in the same breath. Enron's creditors, meanwhile, didn't sit still this week. Citigroup (C, $47, down 2), one of our Financial Portfolio holdings, openly mulled acquiring Enron's core trading business, presumably to recover some of its money. J.P. Morgan (JPM, $36, down 4), another of our Financial Portfolio holdings, chose a different route, filing a $2.1 billion lawsuit against the bankrupt energy trader. Tremors from Enron's collapse continue to reverberate through the energy sector. Some analysts and ratings agencies drew comparisons between Enron and Calpine (CPN, $13.20, down 8), with Moody's warning that it might downgrade the company's debt to junk status. And El Paso Gas (EPG, $40, down 4) revealed that it used financial vehicles similar to Enron's to keep $2 billion in debt off its balance sheet. Ah, Henry. No rest for the fleet of foot I suppose. Going to get my Times this morning through the frozen dawn I see my neighbor Bruce Kovnor is building something that looks like an iron reinforced bunker on his property. Very odd looking structure... forty' by forty' with heavy three story twenty five inch steel beams on the vetical. It looks like it could take a direct hit. After twenty five years of trading is this how one winds up? Very best Clark NB. Don't you think somewhere along the line here the Herstatt Effect ...will unravel all the leaps, Frumps, and wizzles? I worry about the Floating Rate T's collateralized with sub par credit card accounts. Perhaps it is these Reverse Floating Twizzles that will come apart? Or, are we sufficiently hedged?