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

To: accountclosed who wrote (909)	4/14/1999 11:56:00 AM
From: Worswick	Read Replies (1) \| Respond to of 2794

Hello... ref yours: "...can you offer more detailed evidence of the risks that you see as truly threatening the stability of the banking system?" Since we are speaking about derivatives here I assume we are speaking about derivatives Antoine. ... basically, in the "financializaion" of the world - led off by the bundling of asset classes and derivatives thereof - more and more money has been made and is put into more and more archane financial instrumwnts by the banks. This almost remorselless chase for higher returns has pushed the banks push further and further into more arcane areas of finance. Risk kid ain't what it used to be. The risks here are simply - aside from risks of bookkeeping and execution - systemic. If this market goes down 30% I think our banking system which has leveraged it's positions in many ways in many sectors with our fractional banking system will get a new appreciation of the laws of gravity. At this point banks who have geared their assets to extremes never seen before will implode. What are the risks to the banking system? The answer: everything. I'd study the bank panic of 1933 if I were you. It is a great lesson about banks. We got a narrow miss last August and September when Russia repudiated it's debt and things began to wobble. I believe the Russian economy, as I read somewhere, is about the size of the Danish economy. The danger could come from anywhere to our banking system. Real estate. Stocks. Bankruptices of other banks. A slowdown of the market and the problems of margin. Brazil. Mexico. Japan. etc. Enjoy this all while you are seeing it now. You might see it again in your lifetime. Best to you, Clark