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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (245414)	6/12/2003 4:55:49 PM
From: UnBelievable	Read Replies (2) \| Respond to of 436258

Somebody Was Sitting On The Bid Of All The T-Bill Futures from about 3:00 on this afternoon (not being very shy about making sure that money stays cheap).

To: Knighty Tin who wrote (245414)	6/12/2003 5:55:02 PM
From: 10K a day	Respond to of 436258

send me some of that stuff ..

To: Knighty Tin who wrote (245414)	6/12/2003 11:09:10 PM
From: ild	Read Replies (1) \| Respond to of 436258

From ContraryInvestor: During the first quarter, total notional derivatives outstanding in the US banking system increased $5.3 trillion, or 9.4%. Annualized quarterly growth was an astounding 37.8%. Growth in 1Q alone exceeded total growth is US banking system exposure in every entire calendar year except 1998, 2000 and 2002. 96% of total 1Q banking system derivatives growth was made up of interest rate related contracts. The first quarter ended with 87% of total banking system contracts levered to interest rate movements. Foreign exchange contracts made up another 10%. As yields dropped across the yield curve and corporate borrowing was again being facilitated relatively enthusiastically by the capital markets, growth in interest rate swap contract activity continued its uninterrupted upward trajectory. Interest rate swap contract growth accounted for almost 60% of total increased 1Q derivatives exposure inside the banks. Clearly the allure of swapping into yet heavier total cost of capital exposure to the short end of the curve among many in corporate America continues as we speak. And why not when the Fed is virtually guaranteeing a risk free swap transaction over the intermediate term (at least as far as short maturity rates are concerned)? Stepping back for a minute, the Bank for International Settlements recently estimated total worldwide notional derivatives exposure at a relatively mind-boggling $151.5 trillion. Mathematically, the US banking system alone accounts for 40% of this. Assuming that 81.4% of US banking system exposure is hedged or netted, then potentially up to $50 trillion in notional banking system offsetting hedge transactions have been completed with counter parties. Who, outside of the US and global banking system itself would have been big enough to accommodate at least a good portion of the other side of this hedge? Set The Controls For The Heart Of The Sun...We're sure by now you have seen the news regarding mortgage financing behemoth Freddie Mac. We'll just have to see what lies at the heart of the apparent accounting problems. As you know, new rules regarding derivatives reporting may have a good bit to do with it. Although we are far from experts on the subject, derivatives need to be highly correlated with the assets (or risk) a corporate entity is attempting to hedge. If correlation is not high, auditors can deem the derivatives assets as opposed to hedges for accounting purposes. Although we have absolutely no idea what's up at Freddie, this may end up being a part of the problem. Was Freddie using derivatives to smooth their earnings? Let's face it, who isn't attempting to smooth their earnings in some manner or another? What really struck us as a bit funny was that the resignations/terminations of the CEO, COO and CFO seemed to have come out of the blue. By that, we mean that there was no advance notice that often is evidenced by weakness in the stock price prior to the official announcement. There are so many folks involved in this (FRE employees, the PWC auditors, etc.) that we were surprised it seemed no news at all was leaked. It's almost always the case on the Street that someone knows. Has a real code of silence been put on this case? Moreover, are the three "in the know" tops dogs at FRE being escorted out of the building solely because they were employing accounting measures to smooth earnings? If so, then can we expect management teams from another maybe 499 out of the Fortune 500 to also meet the same fate at some point?