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

To: Henry Volquardsen who wrote (1085)	4/3/2002 3:01:48 PM
From: Ahda	Respond to of 2794

NEW YORK (Reuters) - Shares of energy trader Dynegy Inc. (DYN - news) fell nearly 9 percent early Wednesday following reports that the company used a special-arrangement partnership to increase its cash flow and cut its tax bill. We have reached a stage in history where we have lost competitive labor. This would be the outcome of a nation whose laws were written to protect it citizens from labor abuse. The average wage however in any particular profession amounts to cost factor that is required in knowledge time that is required to properly perform in that profession. In stating this I wonder what is productive in the manipulating of figures though the numbers have increased the concept of accounting principles were those that aided in the continued creation of wealth. The very base of any society is continuation of prosperity . If foundations are built in a solid fashion the end result is a durable product. When one sees the demise of any system the question becomes where was the corruption in the systems actions whose end result was the demise of the whole. In the case of Argentina or Russia or any nation in the world it amounted to the lack of ability to service debt. If there were once guidelines that were used in Accounting the reason was a simple tried and true fact the ratio of debt to potential of performance. In the area of risk that is associated with the less established companies the risk was very high as well as the potential of reward. If the laws that are in place cannot operate efficiently to protect this nation but function in flux due to numerous revisions there is a question of integrity that is silently being asked not only by those here but those elsewhere. The underdeveloped nations are now in what I feel is a natural process of progression . Growth occurs because knowledge and need increases are both reaching out. The result is business can expand and create income for the people of the nation as well as the fledgling corporate structure. Debt facilitates growth however by law no matter how it is worded it falls under no other term but debt. When debt is excessive and becomes the prime output of an economy which is based on legal proceedings productivity of products is no longer the generator of income. . The question to me is if corporate structure has limited product proclivity we there of find we are forced to turn to our legal resident advisors as our prime export product to the world. This morning when I read about DYN I thought of Enron and Anderson who sanctioned the method of accounting to the public, these actions were not wise for either the corporation or the holders of their paper or the public who invested in their capability. Define a derivative, it is a financial tool or paper tools that was once representative of product value, now this tool has conformed itself into being the sale able product. To me we could very well find ourselves due to negligence of a different variety unable to service the debt we have acquired in our corporate world. If the methods we use create too high a potential of risk we discredit our system entirely as well as create question of our integrity to our peers in the world. If a nation prints dollars infinity is the balance, sheets can be flooded with funds illusionary though they be there is a non ending internal wealth that can be achieved. It is only when an external debt requires payment through a business transaction that the sheets are questioned and the value of non value of those dollars entered are determined. When debt has become so vast that the nation is no longer product viable but debt driven to viability by creation of debt tools the systems validity must be questioned. The legal profession is not the nation it should be a part of the vast economy that does what it is intended to do adhere to laws that history has proven create a future for the whole. When the legal system becomes driving element of the economy it questions if the economy is capable of product production. An economy so debt tool driven cannot possibly compete on an export base unless it can export the very tools it uses to maintain its strength. The difficulty in exporting that tool to the world is much of the reputable business world still begins functions from a term called gentle mans agreement. The members of the legal profession and the derivative creations of said compose a minor part of economies that have existed far longer than ours in other portions of the world.

To: Henry Volquardsen who wrote (1085)	4/3/2002 6:48:56 PM
From: JBTFD	Read Replies (1) \| Respond to of 2794

<<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. >> The Rhythms New Connections Raptor and the losses it incurred at the expense of the Enron shareholder is one example. My point is that the derivative transactions and use of special purpose entities gave them the rope they used to hang themselves. They used derivatives and special purpose entities to engineer their balance sheet which enabled them to take on the gargantuan debt. To say that derivatives had nothing to do with it is in my opinion laughable. They were at the center of what went wrong with the company. They made some lousy business decisions, yes, but without the derivatives and special purpose entities they would not be in as bad shape as they are now in.

To: Henry Volquardsen who wrote (1085)	4/4/2002 2:00:50 PM
From: Thomas M.	Read Replies (1) \| Respond to of 2794

How can you say this: There were no hidden or unexpected risks that were associated with derivative structures that caused losses. Everything Enron did with those special purpose vehicles, and SPVs fwiw are not in an of themselves derivatives, could have been accomplished with straight debt. And then follow it with this? Enron was sunk entirely by massive debt that they had concealed with derivatives and partnerships. It makes it hard to take you seriously. Tom