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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: martin001 who wrote (49584)	4/10/2002 12:51:30 PM
From: LTK007	Respond to of 99280

from your post , this is heavy duty <<"Swaps hold no magic really - if short rates move up, one side loses while the other side gets paid." Gross notes that with some $43 trillion in worldwide swaps outstanding, corporations' appetite for derivatives "may serve to reduce interest rate costs in the short run, but increase exposure/risk in the long run." As a result, Fed Chairman Alan Greenspan "dare not raise interest rates too much or risk sinking the stock market and the economy once again," Gross wrote. He reckons that will limit the Fed to taking back only around its post-Sept. 11 interest rate cuts, lifting the funds rate to around 3%. And because the central bank's latitude to raise rates is limited, it may mean the economy may have to contend with higher levels of inflation than would otherwise have been the case. The extensive use of derivatives also raise the same bugaboo that drove the original GE criticism, namely, increased disclosure, Gross said. He said in a late March interview on CNBC that while "GE is one of the highest rated companies in the world," the troublesome part is "a matter of disclosure." -Michael S. Derby, Dow Jones Newswires; 201-938-4192; michael.derby@dowjones.com >>