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To: smolejv@gmx.net who wrote (211715)	12/29/2002 3:33:48 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 436258

as i recall the 50 trillion amount is just for the US banks. i think the world total is about twice that amount.

To: smolejv@gmx.net who wrote (211715)	12/29/2002 10:59:14 AM
From: GraceZ	Read Replies (2) \| Respond to of 436258

If you examine the LTCM case thoroughly you will see that the problem wasn't the amount of derivatives or even the complexity (they were using fairly straightforward transactions) it was that the transactions were dependent on the market acting in a rational manner (that both ends of the seesaw do not travel in the same direction) and because the transactions were seen as so low risk they didn't have adequate reserve capital (too highly leveraged) to cover the market acting in a totally irrational manner for an extended period of time. The other thing they didn't count on was that other market participants, once they sensed their risk, would act in a concerted way against them. Here is an excellent article in six parts covering that fiasco: Message 18278925

To: smolejv@gmx.net who wrote (211715)	12/29/2002 12:09:52 PM
From: 10K a day	Respond to of 436258

wel.. i would kind of equate it to a call spread...or put spread...or calendar spread...and the funny thing is...tho...whenever you try to 'out think' how those things gonna' come out....(say you buy the low price in the money call..and you sell the higher risk out of the money call)....wel...in a market that just doing the slip sliding away routine...you can't really win on those...You gotta' hit the sweet spot of the market when you trading those type of derivaties..IMO...and the longer the time you hold them....and the more you think you hedged and leveraged yourself in to safety...wel...the longer you hold them...the more chance they got ....the time...to go against you...and once you trying to rehedge..and rethink...and make a new escape plane for the 10th time...well...that's about the time your screwed (totally)...and the underlying going to gap in your face and you going to blow up like that napalm trader you read about... :)