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

To: Worswick who wrote (911)	4/14/1999 12:55:00 PM
From: accountclosed	Read Replies (1) \| Respond to of 2794

Clark, I'm not sure how to react to your two recent posts. When I said "Can you offer more detailed evidence of risks that you see as truly threatening the stability of the banking system?"...I was aware that we were talking about derivatives on this thread. Yes there is huge volume of derivatives out there. When you suggest that I study history, I would note that I have studied many crashes and panics. And yes, in a world with large volumes of derivatives, there will be many winners and losers in a 30% market downturn. There is really no debate about that. However we had recently focused the discussion to a debate of whether simply due to the proliferation of derivatives, the banking system would be imperiled. When I asked for specifics...I meant could you provide statistics and/or a model that you feels show your case. How much of the risk do you see as losses on loan portfolios due to unsecured loans to overleveraged hedge funds? How much of derivatives do you have evidence for as not offsetting with the same counterparty? What is the state of the art of credit risk management within money center banks? How much of derivatives that banks hold are outright directional bets on the stock market? on the bond market? on foreign exchange? Simply because the model has changed such banks don't offer fixed rate products anymore and off load the interest rate risk to the market doesn't of itself lead to the conclusion there is more systemic risk. sorry...but i have to run at this point...what I was trying to say is make your point with statistical facts if you have some handy. I concede that financial panics happen and that there are more derivatives in the market at this point. tia