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.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: reaper who wrote (145016)	1/21/2002 12:14:43 PM
From: yard_man	Read Replies (1) \| Respond to of 436258

you're right, of course, but ENE is the one that made it on to the radar scope of J6P and the media ... and there's the issue of size. I agree with the commentator at HD Brous -- it's a watershed event -- no the indexes did not all collapse on the heels of the announcement, but it is working its magic as its import festers in the minds of the public.

To: reaper who wrote (145016)	1/21/2002 12:55:45 PM
From: GraceZ	Read Replies (2) \| Respond to of 436258

The biggest difference between ENE and all those names you mentioned is that in ENE's case the derivatives that were used to offset risk all came back to Enron, there was no third party. This was both good and bad. It was what contributed to the collapse in the first place but it also kept the collapse from becoming a systemic collapse. When you use derivatives to offset risk it doesn't really lower the risk it simply spreads it out over lots of other entities. If the failure is big enough its enough to effect the market value of like vehicles such as in the risk LTCM would have posed by dumping their assets on the market all at once. The "good" thing about the ENE debacle is that while it probably put energy futures trading back 20 years and plenty of third parties lost money, it was relatively self contained, there was not a well established market with like vehicles. Likewise, PVN didn't present a systemic risk because the risk was spread. It would take numerous simultaneous PVNs to create a systemic banking risk. I don't rule out that it could happen but then even when we saw huge numbers of banks going bust in the 80s during the S&L debacle it still remained at a size that was a rounding error in the GDP.