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

To: JBTFD who wrote (1076)	4/2/2002 10:55:50 AM
From: Ahda	Read Replies (1) \| Respond to of 2794

Derivatives International companies also hedge dollars. I don't know the term to use other than a hedge as they are buying insurance to cover all directions of currency. This does not add to earnings it amounts to the cost of protection of dollars. I suppose if one got too creative here and left themselves open to injury by carrying a put on one currency to avoid down side injury instead of a put and call on all currency involved there could be a catastrophe in the making. Financial instruments are very varied. In the above case they are used to protect from risk yet are a cost to profit. In enrons case I feel it wasn't so much derivative exposure rather a new derivative of standard accounting procedures that caused the demise.

To: JBTFD who wrote (1076)	4/3/2002 10:12:06 AM
From: Henry Volquardsen	Read Replies (3) \| Respond to of 2794

those losses were only related to derivatives because Enron used derivative structures to transfer the assets and debts to the partnerships to hide them. the derivatives did not cause the losses. Excessive debt to build their broadband business with little revenue caused the losses. The derivatives were just a transfer mechanism. if you don't buy it then why don't you explain exactly how Enron lost money because of derivatives and not because of their failed business strategy.