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Enjoyable reading Bruce, hadn't thought about the Russian default much. I
was noticing how the Wilshire 5000 took the rate cut and it surely doesn't
look like the Dow. Thanks.
Brent
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> From: BUBLS@xxxxxxx
> To: abprosys@xxxxxxx; realtraders@xxxxxxxxxxxxxx
> Subject: Re: Fed cut
> Date: Saturday, October 17, 1998 11:58 AM
>
> There has been a big default. Russia defaulted on 200 billion in debt
that
> was issued in spring of 98. This kind of debt is the kind that is used in
all
> kinds of swaps and other arbitrage spreads to gain yield advantages by
outfits
> like LTCM based on statistical models and the naive assumption that
sovereigns
> will not default. These securities less than 6 months old are trading at
> approx. 7% of par. That means 93% of 200 billion in losses is cascading
> through the financial system looking for a final resting place. BofA
writes
> off 1 bil. and BankersTrust 500 mil and so on. The big shooters have all
> hunkered down like in a giant game of dodgeball to the death and as a
> consequence liquidity has disappeared. The mainstream press paid
> astonishingly little attention to the Russia default but the history
books
> will mention it prominently.
> Bruce Lawrence
>
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