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

To: robnhood who wrote (150037)	2/7/2002 10:22:47 PM
From: B.REVERE	Read Replies (1) \| Respond to of 436258

G7 meeting this weekend----dollar devaluation in the cards?

To: robnhood who wrote (150037)	2/7/2002 10:34:18 PM
From: Secret_Agent_Man	Read Replies (1) \| Respond to of 436258

rrman, The real beauty of gold right now is we don't really know why it's going up By John Crudele New York Post February 7, 2002 Is J.P. Morgan Chase too big to bail? Last week I posed the more common question: Was the bank too big to fail, or allowed to fail by the government? It's a logical question, since J.P. Morgan Chase has had a string of bad luck recently, including involvement with Enron. The bank says its luck hasn't been as bad as it looks, and I'll get to that in a minute. But J.P. Morgan chief exec William Harrison admitted publicly yesterday that the bank had assumed too much risk in dealings with Enron. But I saved potentially the most ominous and admittedly most confusing of J.P. Morgan Chase's bets for last -- derivatives. Lot and lots and lots of derivatives. Enough derivative exposure, in fact, to dwarf the entire gross domestic product of the United States. What are derivatives? They are investments -- gambles, really, like those made by Enron -- on things that are "derived" from other investments. The dollar, interest rate spreads, stocks, livestock -- you name it, because your guess will be as good as anyone else's outside of J.P. Morgan. J.P. Morgan declined a request to discuss its massive derivative position even as it was defending its streak of bad luck. Just how massive is Morgan's derivative gamble? Get this -- it has a potential, or notional, value of $29 trillion. That is in addition to net credit exposure of $94.7 billion. Trillions in derivatives. As in three times the nation's entire annual gross domestic product. Here is another comparison to consider: Citigroup, another giant bank, only has $9 trillion in derivative exposure. Says Jim Grant of Grant's Interest Rate Observer: "So dominant is Morgan Chase in the derivatives market that its exposures look like typographical errors." Adds bank analyst Charles Peabody of Ventana Capital, "It's an incredible figure and it's very dangerous. There's no exit." On the bright side, J.P. Morgan Chase's derivative position has been growing steadily for years, so far without an apparent mishap. But, then again, the country and the banking industry hasn't been through a recession in recent years. As for its bad luck in loans to companies like Kmart, Global Crossing, Enron et al., as well as Argentina, J.P. Morgan Chase says that its losses on commercial loans are equal to less than 1 percent of its total portfolio. And it promises that it isn't hiding any losses off the balance sheet -- like PNC Bank is accused of doing. And apparently taking one from the Ken Lay quote book, J.P. Morgan Chase says I'm relying too much on a small group of bank industry analysts in my critique. I hope the bank is right, because J.P. Morgan Chase's dabbling in derivatives makes it too big for even the Federal Reserve to bail out. C4T