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During the Crash of 87 there were futures, the S&P was traded and options
on futures as well as the OEX. As for being bankrupt, many broker dealers
on the NYSE as well a market makers on the NASDAQ and on the options floors
and Specialists were carrying negative balances. In fact a bank in Chicago
did finally go belly up. There were many that didn't get the benefit of
that very favorable government loan treatment and lost millions on that day.
I personally know of one person that lost $80 million and another who lost
$20 million in a couple of hours. To lose a million on that day was no big
trick. There was no way to hedge because every time you went to hedge they
would stop trading that item. With unlimited borrowing power many
specialist firms were allowed to stay in business with negative balances and
provide a bottom to that market. Options on the OEX that were almost 100
points out of the money were quoted as high as $65 and there were no
sellers for several hours. What happened to the American way then? Why
not let those that took the unlimited risk go the way they should, bankrupt,
and those that did have limited risk or those that were short reap the full
benefit of their positions? Once again the government stepped in to protect
the privileged and the political favoritism goes on. Will the Fed and Bush
let the Dow go to 5000 in an election year? How much pressure is placed
upon the Fed by the party in power? No one really knows except those in
power. All I can relay is what I have seen happen. The rest is just guess
work by those trying to find a reason.
----- Original Message -----
From: "Adrian Pitt" <apitt@xxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Wednesday, November 19, 2003 1:53 AM
Subject: RE: [RT] Re: Fed supporting market
> Ira,
>
> You're a well balanced and well educated person....therefore you should
> have no problem providing reference to the statements you made below.
>
> Such as what do you mean by unlimited credit? We all know central banks
> can print money...so what?
>
> Who went bankrupt? The Fed?
>
> Equity futures have only been around since early 80's so are you saying
> the fed went bankrupt sometime in the past 20 years???
>
> If they went to buy futures to make the market go up to help them from
> bankruptcy you must also be saying that their stock portfolio which you
> say they held was also a significant part of their assets??? Can you
> present a balance sheet please showing this in the relenvant year?
>
> This would be a fascinating insight for me, as it would show one of the
> most extraordinary events of the 20th century, with barely a murmur in
> the press about it, and show something radically different from every
> central bank balance sheet around the world.
>
> Adrian
>
> > -----Original Message-----
> > From: Ira [mailto:mr.ira@xxxxxxxxxxxxx]
> > Sent: Wednesday, 19 November 2003 6:05 PM
> > To: realtraders@xxxxxxxxxxxxxxx
> > Subject: Re: [RT] Re: Fed supporting market
> >
> >
> > What do you think they did with the unlimited credit when
> > they were bankrupt? They went out and bought futures and
> > stock to support the market and increase the value of their
> > portfolios.
> > ----- Original Message -----
> > From: Dan Goncharoff
> > To: realtraders@xxxxxxxxxxxxxxx
> > Sent: Tuesday, November 18, 2003 8:43 AM
> > Subject: Re: [RT] Re: Fed supporting market
> >
> >
> > Why is the Fed providing liquidity at a time of high risk,
> > when free markets may otherwise no longer function properly
> > in the short term, be worse than a branch of the government
> > making an active decision to buy futures. Providing liquidity
> > allows the market to function; buying futures favors one side
> > of the market over the other. In my view, buying futures is
> > as bad as selling futures -- it means the government is taking sides.
> >
> > Ensuring the proper functioning of the market is one of the
> > stated functions of the financial markets is one of the
> > purposes of the Fed.
> >
> > Regards
> > DanG
> >
> > Ira wrote:
> >
> > I thought that it was aimed at government intervention in
> > the markets. It may not be the same as buying futures, it is worse.
> > ----- Original Message -----
> > From: Dan Goncharoff
> > To: realtraders@xxxxxxxxxxxxxxx
> > Sent: Tuesday, November 18, 2003 7:18 AM
> > Subject: Re: [RT] Re: Fed supporting market
> >
> >
> > Providing liquidity to the markets is not the same as
> > buying futures, which is the charge leveled in the original message.
> >
> > Regards
> > DanG
> >
> > Ira wrote:
> >
> > The fact is it did happen in 1987. The fed told the
> > banks to give unlimited credit.
> > ----- Original Message -----
> > From: Dan Goncharoff
> > To: realtraders@xxxxxxxxxxxxxxx
> > Sent: Tuesday, November 18, 2003 5:21 AM
> > Subject: Re: [RT] Re: Fed supporting market
> >
> >
> > Have you ever seen it claimed in a respected
> > source? If so, I would be interested in the reference,
> > because I have long sought such a mention in the established
> > press, without success. AFAIK, it is just foolish gossip.
> >
> > Regards
> > DanG
> >
> > BobsKC wrote:
> >
> > It is commonly accepted knowledge in the business world and
> > while I most
> > certainly have not personally observed the practice, I have
> > no recall of
> > the White House ever denying it, either. If the market
> > tanks, so does
> > Bush. Do you not believe that he has the means to prevent this?
> >
> > Bob
> >
> >
> > At 02:57 PM 11/17/2003 -0800, you wrote:
> > This is a strong statement, variations of which I've heard
> > many times with no factual support. Is there any support here?
> >
> > regards,
> >
> > tbr
> > > the Fed has shown in the past how it can hold up
> > markets via futures purchases
> >
> >
> >
> >
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