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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Robert Douglas who wrote (6740)	9/26/1998 10:02:00 AM
From: Zeev Hed	Read Replies (1) \| Respond to of 9980

Robert, how do we regulate this new monster CCI/Traveler? For that matter, how do we regulate GE-Financial? The boundaries between the various financial services organization is so blurred that it becomes impossible. Insurance companies are regulated on a state by state basis, true bankers by the FED's, investment bankers by the SEC and "hedge funds" by no one. The truth is that a lot of the "normal" money center banks have become so involved with backing (and designing) derivative instruments that they are essentially hedge funds themselves. There is a "clear and present" danger that a financial "accident" could precipitate a domino effect in the banking system. I think that AG is keeping the FED's rates where they are so that he can use this weapon to counteract such an accident if it were to occur. Essentially all pundits (24 out of 25 according to NBR) expect a reduction in the FED rates this Tuesday. I wonder if they will be proven wrong. Zeev

To: Robert Douglas who wrote (6740)	9/26/1998 10:19:00 AM
From: Stitch	Respond to of 9980

Robert, <<What I was referring to is managers taking reckless risks knowing that the FED would bail them out if things fell apart. >> I find myself of the camp that believes "bail out" is a misnomer in this case. But then I also felt that HK was well within its rights and duty to try to defend their currency and market. I also see from your post that you agree that more regulation may be called for. Several of you on this thread will have a much better understanding then I of the mechanisms that may be appropriate so I should avoid that discussion altogether. But am I mistaken in my assumption that the fed has not "bailed out" LTC? By the way...I was in favor of the RTC and also the Chrysler bail out so may be guilty of a predisposed acceptance of fed suppport in these cases. However, in attempts at objective thinking I still fall short of defining their actions in this case as a bail out. To me this is exactly what governments can do. I much prefer support to keep markets calm over 500 dollar coffee pots or, for that matter, any of the golden fleece award candidates. But I also think that they need to be constructed in ways that do not restore management to the driver seat of a newly refurbed vehicle, in control of public funds. So I guess I am intimating two questions here. Can you challenge my definition of the fed action in this LTC case as falling far short of "bail out", and what role do you see in terms of future crisis for the feds in similar cases. Thanks for your continued edification. I continue to monitor and learn. Best, Stitch