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Non-Tech : Derivatives: Darth Vader's Revenge -- Ignore unavailable to you. Want to Upgrade?

To: Frodo Baxter who wrote (561)	10/17/1998 2:10:00 PM
From: Thomas M.	Respond to of 2794

... The "pushing on a string" may be applicable to Japan, where all the banks are insolvent, but has ABSOLUTELY NO APPLICATION to the U.S. ... This is a rather surprising and counterintuitive statement. That does not mean it is wrong, but it sure would be nice to know why you feel this way. Tom

To: Frodo Baxter who wrote (561)	10/17/1998 3:54:00 PM
From: Enigma	Respond to of 2794

LK - Polyanna has come to tea? " Consumer debt is but a sapling in the forest of money" a pretty phrase but what do you mean? Don't you think that 93% of disposable income related to consumer debt is a highly leveraged situation. Some sapling! E

To: Frodo Baxter who wrote (561)	10/17/1998 5:12:00 PM
From: Worswick	Read Replies (1) \| Respond to of 2794

Lawrence thanks for your considered reply. I do enjoy reading your posts. Ref yours, "I tire of your allusions, again and again, of some lurking catastrophe hiding under someone's bed, or in some closet. You cannot prove a negative". The last time the NY Fed tried to count....and admitted that the following figure was probably inaccurate.... there were $85 trillion of derivative instruments outstanding in the world. Tell me during the last month, really, don't you think the news in the financial markets has been a tiny bit negative? Or, from your persepective has the financial newsbeen positive and it is must me that has been negative? Going on a bit further in your post love your statement..."Consumer debt is but a sapling in the forest of money". I don't know if you noticed but the credit card companies are very close to changing the US bankruptcy laws. This is a sapling? What is a real tree? Ref. Barron's 10.19.98, For Private Use Only "....In the What-Goes-Around-Comes-Around Department: One of the hedge funds that had an enormous hole blown in its portfolio, thanks to the lovely unpredictability of markets (and long may they remain so), is Ellington Management Group, run by Michael Vranos. Ellington chose to dabble in the mortgage-backed-securities market, which overnight became one of the great black holes in the investment cosmos. Ellington's sad but by now familiar story is that it was spread-eagled by widening spreads. Nicely leveraged, the firm, as its investments shrank rapidly in value, received rude notices from its lenders in the form of margin calls. Ellington had no choice but to dump $1.5 billion of its holdings and not, it grieves us to report, at a profit. The irony, Jaye Scholl, our resident expert on hedge funds, informs, is that Mr. Vranos, a former mortgage-bond pooh-bah at Kidder Peabody, in March 1994 helped liquidate the collateralized mortgage obligations of David Askin's Granite hedge funds, after they collapsed under pressure from -- what else? -- margin calls". And...."That bright Brit, Andrew Smithers, whose savvy opinions have been aired in this space and elsewhere in Barron's, scoffs at the notion that falling interest rates will keep equities aloft. By his scholarly reckoning, the market is twice what he calls its "equilibrium level" and far more expensive than it was at the 1987 peak. Comparisons, he says, "should be made with 1929, not 1987." Andrew's advice, accordingly, is: "Investors should panic now before panic becomes universal." The nice thing about America Lawrence is that everybody can have opinions. I hope you value hearing mine as much as I value hearing yours. With best wishes- Clark