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

To: Henry Volquardsen who wrote (854)	3/26/1999 7:31:00 AM
From: accountclosed	Read Replies (1) \| Respond to of 2794

Henry, perhaps I fired off this question too quickly to you this morning Message 8537394 For one, I see I put it on the wrong thread <g> I left out some of the framework of my question. One thing I didn't salute the flag on is that exchange traded derivatives have their own discipline of margin requirements. So I think I overstated the emptiness of external discipline in the middle range between due diligence and bailout. Perhaps what I should have done is phrased my question in terms of otc derivatives. The other thing that occurs to me as I try to sort out this area in my thinking is that "where do derivatives end"? In other words how in the world can we regulate against stupidity? When we expand derivatives to otc, what is included? Parties can write a contract about anything. You and I can draw up a contract (or shake hands) on a billion dollar bet on whatever we want. Good luck collecting from me <g>.

To: Henry Volquardsen who wrote (854)	3/26/1999 9:28:00 AM
From: Freedom Fighter	Read Replies (1) \| Respond to of 2794

Henry, >>I would be interested in any specific numbers you might have. I'm mostly a bottom up investor so I don't have the info handy. It's available from the Fed. You can find the link at my web page in the economics section (Flow of Funds). I was referring to the credit numbers that are part of the Flow of Funds reports that come out quarterly. They are broken out between financial and non-financial. Non-financial credit growth was not particularly alarming mostly because the Govt. position has been improving and offsetting business and personal. (although I think business recently started to accelerate.) In general it was in line with GDP growth give or take. On the other hand the financial side was very rapid. The only thing I could make of it was that it seemed to be related to the securitization of mortgages and all sorts of other receivables. I do not have a clear enough understanding of the process to determine whether this is dangerous or not. But I haven't seen a explanation that put me at ease either. Balance sheets of Fannie and Freddie have and other pseudo govt agencies have been exploding. Wayne