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To: scotty who wrote (19656)	9/24/1998 8:27:00 PM
From: Broken_Clock	Respond to of 116837

Thursday September 24, 7:49 pm Eastern Time World Bank guards AAA rating as loan demand soars By Adam Entous WASHINGTON, Sept 24 (Reuters) - The World Bank said on Thursday it had taken action to guard its perfect credit rating after record lending to Asia's battered economies and it promised a cautious policy as demand for money soars. Top officials said the bank had already set aside $750 million of net income from fiscal year 1998 to bolster reserves, to take account of the risks associated with its multibillion-dollar loans in Asia. ''We've protected all our ratios,'' World Bank Vice President Mark Malloch Brown told a news conference, releasing the bank's 1998 annual report. ''The markets have no cause for alarm.'' The World Bank's AAA credit rating, the highest offered by international rating agencies, was ''vital to the quality and effectiveness of our operations and to the cost of our borrowing,'' he added. ''Any additional activity we undertake must be within the existing prudent limits to risk.'' The annual report said the World Bank made the largest new loan commitments in its history in the fiscal year to June 30, 1998, with pledges totaled nearly $29 billion, including $16 billion to crisis-ravaged Asian states in support of rescue packages put together by the International Monetary Fund. By the end of the fiscal year, $5.65 billion of this money to Asia had been paid out. Loan commitments were $19 billion in 1997. The big hike in lending hit the World Bank's net income for 1998, which fell to $1.24 billion from $1.29 billion in 1997. A far more dramatic drop in income was reported by the International Finance Corporation (IFC), the bank's private sector lending arm, where net income almost halved to $246 million from $432 million in 1997. Since June 30, the World Bank has pledged billions of dollars more to Russia, in the grips of its own crisis, and it might soon announce billions of dollars in new loans for Brazil and other Latin American economies caught up in the contagion. Demands on the bank's resources have shifted dramatically over the past year, with a greater focus on structural adjustment lending, used to support broad economic policy reform -- usually the IMF's domain. Structural adjustment lending rose to $8.29 billion in fiscal year 1998, from $1.30 billion in 1997 and $350 million in 1996. The World Bank denied the increase in adjustment lending was due to a cash shortage at the IMF, which has been warning for months that its cash reserves were nearly depleted. ''When we see ourselves as getting involved in these emergencies, it is not to in any way substitute or supplement the IMF's crisis management role,'' Malloch Brown said. He said the World Bank was financially sound, despite rising pressure on margins. The bank's board has already agreed to a higher fee structure for loans to ''start to improve our net income position,'' Malloch Brown said. The World Bank could also increase the amount it borrows on capital markets. But Malloch Brown said future loan programs must not overexpose the bank and put its credit rating at risk. ''Our arguments to our owners going forward is: We will continue to be conservative...because...the cost in terms of damage to our standing in the market would be extraordinary,'' he said.

To: scotty who wrote (19656)	9/24/1998 8:43:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116837

More on fund...look like Las Vegas... Dollar Lower As Giant Hedge Fund Requires Bailout . 06:20 p.m Sep 24, 1998 Eastern By Alden Bentley NEW YORK (Reuters) - The dollar fell Thursday on concern that an emergency bailout of a well-respected hedge fund foreshadowed losses for Wall Street firms and slower U.S. growth because of global economic turmoil. The Dow Jones industrial average fell 152.42 points to 8,001.99, erasing most of Wednesday's 257 point gain. Also weighing on the dollar were expectations that U.S. interest rates would soon be heading down in the wake of remarks by Federal Reserve Chairman Alan Greenspan Wednesday. The dollar's losses came as financial markets in many centers retreated, digesting news that the New York Federal Reserve Bank had organized a group of 15 major U.S. and foreign banks to save Long-Term Capital Management, a Connecticut-based fund that until recently few thought would ever go under. The dollar ended at 1.6740 German marks, down from 1.6785 at Wednesday's close and at 134.93 Japanese yen compared with 135.85. Long-Term, which boasts two Nobel prize winners and prominent ex-investment bankers among its officers, saw its capital all but wiped out by adverse market movements around the world this summer. The consortium of firms put up a $3.75 billion stake because the fund was seen as too big to fail. Closure could have forced it to unload an estimated $90 billion of investments across a spectrum of unsteady markets and may have exacerbated losses at other investment firms. But the infusion may only be a temporary cushion if markets continue to move against the fund, dealers said. ''The thinking is even though they said they don't have to liquidate now, it seems that them may have to eventually anyway,'' said Jeffrey Yu, a senior foreign exchange dealer at Sanwa Bank Ltd. Hedge funds and other investors who make enormous speculative bets with borrowed money can see losses snowball when lenders demand that they top up collateral -- in what is known as a margin call -- forcing them to liquidate positions in declining markets. In a possible harbinger of bad news for U.S. financial firms, Switzerland's UBS AG, Europe's biggest bank, said market turmoil since August had caused a substantial drop in third quarter income. Hopes that the Fed will shield the U.S. economy from any global downturn were heightened Wednesday after Greenspan said action was needed soon to stabilize the contagion. The remarks were the strongest indication yet that the central bank could lower interest rates under its control when policy makers meet Tuesday. Lower U.S. interest rates would make dollar-denominated financial instruments less attractive to investors. Elsewhere, the British pound jumped to $1.6970 from $1.6849. The dollar fell to 1.3857 Swiss franc from 1.3895 and to Canadian $1.5127 from C$1.5170. Copyright 1998 Reuters Limited.

To: scotty who wrote (19656)	9/24/1998 8:45:00 PM
From: goldsnow	Respond to of 116837

Diverging dollar seen poised for more losses vs mark 10:06 a.m. Sep 24, 1998 Eastern By Astrid Zweynert LONDON, Sept 24 (Reuters) - The dollar will continue to be pulled in opposite directions against the mark and the yen despite its resilient response on Thursday to the prospect of a near-term cut in U.S. interest rates, currency analysts said. While Japan's struggle to reform its banking sector and revive its economy provide a boon to dollar/yen, several negative factors point to further losses against the mark. The mark has strengthened this month amid expectations that Europe's single currency will kick off with a firm start in January, helped along by expectations that Europe will avoid the worst of global market turmoil. ''The longer term outlook for dollar/mark is negative because the euro will get off to a strong start, and the European Central Bank is unlikely to want to start off with a rate cut,'' said Peter Luxton, economic adviser at Standard&Poor's MMS. The net effect from a U.S. rate cut might be neutral for the dollar, analysts said, as easier rates before the end of the year are widely expected and priced into the currency. That helped the dollar to recover back above 1.68 marks on Thursday after a knee-jerk selloff following Federal Reserve Chairman Alan Greenspan's hint on Wednesday that U.S. rates might be cut as early as next week. The policy-setting Federal Open Market Committee meets on Tuesday. Markets are also watching the outcome of Sunday's German national elections. Opinion polls show Chancellor Helmut Kohl has managed to narrow the gap his Christian Democratic Union party has with the front-running Social Democrats. A swing to the left could be negative for the mark but the elections are not seen as a major risk to the mark's strength. The mark has risen from a low of 1.8135 per dollar in late August. ''People realise that we are poised to make a major move in dollar/mark and the German election will be the catalyst,'' said Julian Callow, currency econist at Dresdner Kleinwort Benson. Whereas a U.S. rate cut now looks like a done deal, European central bankers have been at pains recently to douse market expectations of rate cuts by industrialised nations to help reduce the impact of slowing global growth. This has helped to strengthen the mark ahead of the start of European economic and monetary union (EMU) because the euro is seen less at risk to suffer the fallout from Asian and Latin American turmoil. In contrast, if the latest financial troubles in Latin America put a strong brake on the region's growth, the impact on U.S. growth and its trade deficit will be more serious than the Asian slump because America has closer economic links to Latin America. About one-fifth of U.S. exports go to Latin America. Moreover, analysts say the dollar is showing signs of diverging from movements on Wall Street. Historically, the dollar has a close correlation with the ups and downs of the U.S. stock markets. But this month the dollar has failed to benefit from the Dow's rise from a 10-month low at 7,400.30 in early September. Even though the Dow has pushed back above 8,000, the dollar has made little progress from its 16-month low of 1.6700 on September 11. At 1300 GMT the dollar was at 1.6788 marks. ''A U.S. rate cut would be good for stocks and in the short-term good for the dollar,'' said a senior forex trader at a German bank in London. ''But what if a global stock market recovery sucks foreign money out of U.S. Treasuries into foreign stock markets with better growth prospects than the U.S. - that's dollar-negative,'' the trader said. Against the yen, the dollar has been in better shape, rising to above 136 yen this week from a low of 128.90 on September 11. But its rally has been a function of yen weakness rather than dollar strength, analysts argue. ''Simply looking at fundamentals, Japan's economic output gap and their monetary stance require further yen weakness, with no weight given at all to politics or banking problems,'' said Peter von Maydell, currency economist at Credit Suisse First Boston. Ultimately, the widening U.S. current account deficit -- already the biggest in the world -- is likely to hit the dollar on all fronts, in particular when the launch of the euro offers investors a new rival world currency. Economists predict the U.S. current account deficit could be as high as 3.00 percent of GDP this year, whereas Japan and the EMU-11 countries are running a significant current account surplus. ((London newsroom + 44 171 542 7792 fax +44 171 542 5293, astrid.zweynert+reuters.com)) Copyright 1998 Reuters Limited.

To: scotty who wrote (19656)	9/24/1998 9:41:00 PM
From: long-gone	Read Replies (1) \| Respond to of 116837

RE derivatives I knew we were winning a couple of weeks ago when I heard Cramer on CNBC saying he did not understand all this interest in playing with borrowed money. When prople with his money won't borrow to play, should anyone? rh

To: scotty who wrote (19656)	9/25/1998 3:04:00 AM
From: Zardoz	Read Replies (2) \| Respond to of 116837

"Derivatives are the WORST place to be in a meltdown." Go GOLD Go... It's over valued by $10.00 I'm option hunting for puts on gold Hedgers. Looking for a further rise today $2.80, than starting down Tuesday. Maybe you are missing the real reason why Gold is up... {Go scan the Japan Nikkei} ichart.yahoo.com^n225 It aint the short positions being covered, it's the currency Arbitrage being created. On Thursday there was a currency backtrack. mypage.direct.ca This chart shows long positions lower right, short positions upper left. Never failed since 1971. But it's too early to short YET. mypage.direct.ca When the Gold volatility line goes above the currency volatility {green line above the red} you have a dramtic swing in the POG down. So why is Gold going up: The return to Japan of assets. If you look at the RED line: mypage.direct.ca Price of GOLD is only reacting to a currency manipulation... A strong YEN, from Japan banks selling of asset, and bringing home they YEN. When the YEN breaks... it's over for gold. Gold is going to $250 and lower. But hey, it's your money... Just remeber this: A margin account is a derivative account. If you have ever shorted a stock, you've played a derivative. {Margin is leverage}