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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Sam who wrote (3465)	7/9/2002 2:08:31 AM
From: Raymond Duray	Respond to of 3536

Why post idiocy? Re: Last week I noted reports that collateralized debt-obligation managers (read "banks") could be on the hook for $500 million if WorldCom were to file for bankruptcy. When WorldCon blows up, the debt market is dealing with a $30 Billion headache. Task is dissembling, distracting, devious and destructive. He's qualified to flip hamburgers at McDonalds. But I wouldn't trust him at In-and-Out.

To: Sam who wrote (3465)	7/9/2002 9:18:59 AM
From: Robert Douglas	Respond to of 3536

Hi Sam, There's an old saying that all news is bad news in a bear market. A bear makes routine and commonplace events take on ominous tones. I mean, really, do you think that WorldCom signals a "debt meltdown?" Scandals aside, it seems more like a company with massive debt that couldn't ride through a downturn in business. Not exactly a new event in the history of capitalism. Look at this statement from the article: "If we don't see a renewal in risk appetite in the corporate lending market in the next six to 12 months, then we are on a very greased banana peel toward a Japan-type syndrome," First, the article complains about bad loans and without losing a breath, they complain that the banks aren't making enough loans! Damned if you do, damned if you don't. A perfect bear market attitude. I've seen this stuff before. A garden variety recession (which this one is) pushes people into a frenzy as they imagine the worst; like Japan-style stagnation or 1930's type depression. The comparisons are so tenuous that it isn't even worth commenting on them. But in a bear, people lose perspective and a sore throat sends people into the streets screaming "Plague!!" So, when I read articles like these, I cut out the hysteria and try and look at the facts. Do I see any signs that the economy is melting down due to a collapse in lending, or is this just a run-of-the-mill recession with the expected handful of bankruptcies? My opinion heavily favors the second.

To: Sam who wrote (3465)	7/9/2002 11:14:00 PM
From: Lee	Read Replies (1) \| Respond to of 3536

While I am not a big fan of the article, the point about the bond market being sour is valid, if not exactly timely. Telecom debt clearly remains a problem, but mostly we are over the hump on bankruptcies while remaining firms have restructured to improve cash flow. That does not imply a loosening of credit standards by banks nor does it imply a Japanese style need to nationalize a defunk banking system. The story at the moment is a dollar, bond market, and stock market that signal a continuing recession while the income statistics and most economists say otherwise. Who is right? A closer look here sometimes helps. whitehouse.gov