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

To: ild who wrote (257688)	8/26/2003 1:15:48 PM
From: ild	Read Replies (1) \| Respond to of 436258

Date: Tue Aug 26 2003 12:21 trotsky (Hambone@'willing to bet') ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved yes, of course it will happen again. i expect the reflationary bull market to begin around 2010-2014. we have to go through the 'winter' season first though. in short, it is imo NOT happening now. we will see new lows in yields within 6 to 12 months imo, and the stock market will imo likewise fall to new lows. some subsectors ( e.g. banks ) could be cut down by 70 - 80% from here. Date: Tue Aug 26 2003 12:17 trotsky (Earl Grey) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved not to forget, the preferred methodology is 'dynamic hedging' a.k.a. 'delta hedging'. this presumes of course that the market will always be liquid, and more especially, that it will be liquid when that liquidity is needed MOST - in a stress situation. naturally, the models incorporating this basic assumptions are all set to fail at a critical juncture. the blow-out of swap spreads recently nicely illustrated that point. as an aside, 'hedging' may insure individual risk - but it heightens systemic risk, as the risk is only passed on to other risk takers, and the perceived 'insurance' encourages recklessness. FNM's debt to equity is about 55 to 1. GE Capital's is 25 to 1. i don't know CFC's ratios off the cuff, but i know they are recently expanding their ( sub prime lending saddled ) balance sheet by a 200% annualized rate. when the conflagration ultimately comes, no-one is going to be able to stop it, not even the dudes with the printing press.