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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: William H Huebl who wrote (59978)	9/18/2002 8:09:15 PM
From: Real Man	Read Replies (1) \| Respond to of 94695

Nope. They are the credit markets. Mostly interest rate swaps, 14% currency swaps. Currency swaps bear currency risks! Means tanking of the unsinkable USD. Yes, that's the tsunami. They only have 5 Trillion in currency swaps at risk. Hmm.... Hedged, of course, but that's 5 trillion exchange rate risk, if I guess it correctly. Basically, in a swap the cash flow in one currency at one interest rate is exchanged for cash flow in another currency at another interest rate. So there are like vanilla interest rate swaps, in which notional value is not exchanged, but in currency swaps there is an exchange rate forward contract in the amount of the notional value of the swap. JPM has about 4-5 Trillion in these forward contracts. They are also the credit market, and the credit insurer (FDIC???), since they are the leading Fed bank. Uh-oh. Seen Russia in 1998? That's what credit troubles look like on a SMALL scale. Of course, any amount of money will be printed to stop any panic and save the system.