Europe will benefit indirectly as they want to launch a strong Euro -- and the weaker the US dollar, the better chance they have of getting the EURO off the ground.

So -- now there are quite a few reasons for the US dollar to drop -- not just looming recession in the US.

We could be surprised by an Asia rally tomorrow -- even if I have no intention of being part of one.

He has decided to steadily drop rates, and will probably continue to do so for some time. This is probably the strongest deflationary news we could imagine, since AG has so consistently watched out for inflation, and it would take alot for him to turn around and look the other direction.

I think we need to ask ourselves how close the derivatives/debt situation is to implosion -- somewhere in the world. Rudiger Dornbusch tells us that Brazil may go down the tubes around Carnival day -- not a wise thing to say publically, since the consensus has been that Brazil is 'too big to fail'. My reading of this, given the US interest rate reductions, is that the other shoe is about to fail -- somewhere.

We are going to have the rollercoaster ride of a lifetime -- gold equties will probably go down soon. If gold equities plumment, we will have an unbelievable bargain -- for a time at least. Short/intermediate term gold equity investors are likely to have some really nice ups and downs.

Just a thought for you all -- any thought about Y2k coming a year early? What is going to happen to all of those European derivatives trades on Jan 1999? All to be priced in Euros? Or -- just the new ones?

Just think what it must be like for a European Derivatives trader/banker type -- might be easy to screw up if you have to watch yet one more currency in your trades. All that commercial arbitrage might get messed up.

dietary complement.? How long can you live on a tortilla diet ( corn

& beans ) ?

http://www.norfed.org/

Still searching for way to pull IRA rollover ( retirement ) away from brokers ( ie:take possession ) without tax liability.IMHO--- evaporation of co-mingled assets in these tax deferred accounts is most serious risk to all if system folds due to Y2k or other stresses.

And no, I have a 'few' more years to go before I won't get my SSI....

of various sizes and then said, takes about a gallon of gas an hour to

run each of these. !!! At a gallon of gas an hour......if the blackout

period is two weeks or longer ( months? ) wouldn't that require a prohibitive

amount of gasoline to be stored? Several words come to mind: expensive,

bulky, flammable, looters, legality, obvious, smelly, dangerous, and how long can

it last.....what do you do then.....is this the right track....or, should we be

concentrating on other methods?

It is obvious , now, however that the world economy is even worse than we thought. The unamious cut by FOMC illustrates that they have knowledge and information that far exceeds our ( KITCO ) previous prognostications.

We in deep doo do now.

http://www.geocities.com/~CyclePro/Charts/SP500/DerivExpo.htm

he Quarterly Derivatives Fact Sheet from the Office of the Comptroller of the Currency ( OCC ) is a collection of derivative activity information from all banks. Each

bank must prepare a Condition and Income report from which the OCC gathers its data. The most recent report available is currently the 1998 Q2 report from

which the data herein was obtained ( the Q3 report should be available soon ) .

What is a derivative? The OCC glossary contains the following definition: a derivative is a ...financial contract whose value is derived from the performance of

assets, interest rates, currency exchange rates, or indexes. Derivative transactions include a wide assortment of financial contracts including structured debt

obligations and deposits, swaps, futures, options, caps, floors, collars, forwards, and various combinations thereof...

Perhaps the most striking single piece of information in the report is the fact that the total amount of derivatives held by U.S. banks is $28,176,000,000,000 -- in

case you did not count the zeroes, that's $28 Trillion!!

This staggering sum is comprised of $10 Trillion in futures and forwards, $11 trillion in swaps, and $7 Trillion in options. The rest is a fairly insignificant $129 Billion

in credit derivatives. $20 Trillion is concentrated in interest rates and $8 Trillion is in foreign exchange derivatives.

The top 8 U.S. banks hold 95% ( $26.6 Trillion ) of all reported derivatives. These top banks include the following ( with stock symbol ) : Chase ( CMB ) includes

Chemical from merger, J.P.Morgan ( JPM ) , Citibank ( CCI ) , NationsBank ( NB ) , Bankers Trust ( BT ) , Bank of America ( BAC ) , First Chicago ( FCN ) , and Bank of

New York ( BNY ) .

When looking at the percentage of credit exposure to risk based capital, JPMorgan has exposure of 728%, Bankers Trust has 373%, Chase has 334%, Citibank

has 194%, and First Chicago has 175%. The other big banks are exposed for less than 100% of their capital.

Up through Q2 ( June 30, 1998 ) , the banks have made money on their derivative positions, as follows: $1.4 Billion from foreign exchange and $930 Million from

interest rates.

JPMorgan derives 23% of all of its revenue from trading derivatives compared to the next closest bank, Citibank which derives only 7% from its derivative trading.

To be up-front, not all of the $28 Trillion exposure is currently at risk. Actually, when looking at only interest rate and foreign exchange derivatives, only $11

Trillion is at risk with an expiration horizon of less than one year and another $11 Trillion exposure for a 1-5 year expiration horizon. Whew, that's a relief!

It should also be pointed out that only $109 Billion in derivatives is exposed for less than 1 year for equities ( stock market ) . Commodities ( including gold and

precious metals ) are only $71 Billion for less than one year to expiration.

The following table demonstrates the breakdown by category of risk exposure for the 8 banks with the highest derivative positions held. The columns have the

following meanings: Assets is the total assets of each bank, Derivs is the total derivative exposure ( all expirations ) , One Year is the total derivative exposure that

expires in less than one year, Equity is the banks exposure to the stock markets, and 30% Corr is the amount of derivative loss if the stock markets suffer a 30%

correction within one year.

Bank

Assets

Derivs

One Yr

Equity

30% Corr

Chase

367B

8,299B

3,635B

7.8B

-2.3B

JPMorgan

281B

7,447B

2,487B

53.9B

-16.2B

Citicorp

331B

3,299B

2,067B

13.8B

-4.1B

NationsBk

308B

2,325B

331B

8.5B

-2.5B

Bk Trust

172B

2,203B

963B

17.8B

-5.3B

Bk Amer

264B

1,709B

781B

0.4B

-0.1B

1st Chicago

120B

1,199B

469B

4.5B

-1.3B

Bk of NY

63B

264B

19B

n/a

n/a

One you can see, if Chase were to suffer a 10% loss in the derivative exposure which expires in less than one year, their entire asset base would be wiped out. For

JPMorgan it would only take an 11% loss to wipe out their asset base.

For the banks exposure to only the stock markets, JPMorgan leads the pack. If stocks suffer a market correction of 30%, JPMorgan could stand to lose $16.2

Billion. And, that's only their equity derivative exposure with an expiration of less than one year. If the stock markets entered into a long-term bear market lasting 5

years or more, JPMorgan's exposure would be $76 Billion and a 30% correction over that time could result in a loss of $22.8 Billion.

It appears to me that several of these banks have been in a difficult situation for the past few quarters. Many of these banks participated in investing in the LTCM

hedge fund, in addition to directly holding derivatives, which magnified their exposure to market fluctuations. The near collapse of LTCM would have been a disaster

for many of these banks. First, the forced liquidation of the derivatives held by LTCM would have certainly caused the markets to fall even further. Second, the

leveraged exposure these banks had to the markets directly though their own derivative positions, would certainly have added to their losses. Third, with a portion of

derivatives expiring on October 16, 1998, it is no wonder that the FED stepped in to assist in a multi-participation bank bailout of LTCM and announced an

emergency rate reduction on the day before many derivatives were set to expire.

In prior articles, I mentioned that JPMorgan holds controlling interest in the stock of the Federal Reserve Bank, and the FED has been instrumental in making

market-moving announcements over the past few quarters -- it does not take much effort to suggest that ulterior motives may have been at work to influence the

FED's decisions.

The main problem currently being faced by the FED and the banks is what to do next. If interest rates are lowered again, it may cause rate-sensitive derivatives to

generate extreme losses for the banks. Chase has $2.2 Trillion in derivative exposure that expires in less than one year, JPMorgan has $1.6 Trillion exposure.

In addition, adjusting interest rates will also affect currency exchange rates. Chase and Citibank each hold $1.4 Trillion of foreign currency derivatives, and

JPMorgan holds $829 Billion, all expiring in less than one year.

If you have ever wanted to witness an ultra-high stakes situation where the players were literally between a rock and a hard place, this has got to be the very best

example that you will ever see. Unfortunately, none of the information will be made public ( if at all ) until well after the major events have taken place.

Yesterday: Moody's downgrades Japan's sovereign debt

Today: US rate cut - third one in six weeks

Tomorrow: Clinton off for a summit in Japan ( and South Korea )

Nov 25-30: Japan/China Summit in Tokyo. Chinese head of state to visit Japan for first time ever.

The plot is definitely thickening nicely.

Barrick and Placer require other 'hedging techniques'.

How is this to be resolved? It won't be in the short term but there will be some events that will essentially force the retrenchment of the US into its more comfortable isolationist position. Then standing alone, the rest of the world and world alliances will re-calibrate their relationship and position to the US without the massive interference from the US as we are seeing now.

That will mean many things... new and different military alliances, and amongst other things, a new monetary order. ANOTHER has a perspective on what will make this happen. It's a valid perspective, but things will get more complicated than even he/she envisages. Will GOLD play a role. There is no doubt and its bigger than anyone can foresee. That's why the ever increasing and desperate effort to manage it into 'their box'.

I wonder, tho, if we voted what we think Greenspan WILL do or if we voted what we think he SHOULD do. We'll find out soon enough. Let the games begin!

http://apps2.vantagenet.com/apolls/poll.asp?id=811718519

I think one needs to think like an intelligence officer to assimilate information from such sites. I confirm from an independent source before considering as truth. Sadly, there is no other way. Interesting that both Tom Bearden and Ed Dames were both intelligence officers, isn't it? Could be that they have been telling us only part-truths. Would not be hard if this was your profession.

Your profession, and mine has always emphasized the truth, although I have known physicists who have 'fudged' data to make the results come out right.

Markets:

My predition is that interest rates remain unchanged for now. And Gold goes down. I agree with Mike Stewart that -- if gold does not go down this week with all of the bearish stuff -- that would be a very good sign indeed. We are certainly at a major turning point in gold trends.

Did you know that the second edition of Maxwell's 'Treatise on Electromagnetism' was extensively modified -- the first 9 chapters -- by Mr W.D. Niven, at Trinity College, Cambridge, around 1881?

However, these changes were probably intended by Maxwell, who apparently died suddenly. And -- they probably were simplifications that more appropriate for the analysis of Faraday's work.

By the way, have you seen any books accurately summarizing Faraday's original work?

I have a question for you. As far as I can tell, the Quaternion formulation of Hamilton translates into the vector analysis of Heaviside, which is a clearly more palatable analytic tool. And -- I have found nothing from tidbits of Michael Faraday's work that indicates that the Quaternion formulation offers any additional insight over and above Maxwell's equations as modified by Heaviside.

What I have surmised from E. T. Whittaker's two 1909 papers:

1 ) 'On an Expression of the ElectroMagnetic Field Due to Electrons by Means of Two Scalar Potential Functions', and

2 ) 'On the partial differential equations of mathematical physics',

is that the entire electromagnetic formulation of Maxwell's equations can be condensed down into two scalar functions that have a much more simple relation with charged particle motion than the displacement current, and the magnetic intensity. E.T. Whittaker -- a brilliant mathematician -- did not use quaternions for this derivation like Tom Bearden claimed, but the Heaviside formulation of Maxwell's equations.

Regardless, this is highly significant, even if most of what Tom Bearden says is nearly incomprehensible to me.

My guess is that the key problem to a major advancement in electromagnetic theory is to guess optimal formulations of the two scalar functions of Whittaker, F and G. The classical formulation of Maxwell's equations can be derived as two symmetrical second order differential equations involving F and G. This is a non-trivial matter, as there is little physical evidence, with the exception of the Abramov ( sp? ) -Bohm effect, that shows the magnetic vector potential is important to electron motion, even when the magnetic field is zero. Unfortunately this is very much like the 'hidden variable' concepts in quantum mechanics.

How do you come up with the right 'hidden variables' to describe the magnetic vector potential -- or for that matter, F and G -- when all you can measure is D and H? I think more experimentation with the Abramov ( sp ) Bohm effect is needed to resolve this matter.

Comments?

Monday, November 16, 1998 Published at 21:14 GMT

Sci/Tech

Army and police join forces to

beat bug

The Army could be on hand to help with millennium emergencies

The Army is working with police to draw up contingency plans to deal

with a millennium bug emergency, a senior police chief has revealed.

High-level talks are under way to provide military support to police in

the event of chaos caused by computer failure in the year 2000.

The Army could provide air support and other assistance to help move

police from hot spot to hot spot if emergency services, hospitals,

transport systems and other computer-controlled networks collapse

because their equipment fails to recognise the double zero as the

year 2000 dawns.

John Evans, Chief Constable of Devon and Cornwall Police and the

Chairman of the Millennium Co-ordinating committee for the

Association of Chief Police Officers ( Acpo ) , confirmed that the Army

was involved in emergency planning as he signed the Millennium

Pledge, a promise to take action to tackle the computer bug, on

behalf of Acpo.

Mr Evans said: Discussions are going on up and down the country

with top Army officers.

From there, individual forces are

building their plans to see what

military assistance they will be able

to make use of in the event of

difficulties.

The talks were part of regular police

contact with the Army to discuss

contingency plans for emergency

situations, he said.

Possible military involvement in

providing police support in the year

2000 emerged earlier in November

after a leaked memo from Scottish

Secretary Donald Dewar suggested

Territorial Army soldiers could be

necessary to maintain services.

And in another move to prepare for the dawning of the new

millennium, Mr Evans said leave was being cancelled for all police

officers over the four-day extended bank holiday to ensure forces were

up to strength.

Gwynneth Flower, Managing Director of Action 2000, the company

set up by the government to encourage companies and services to

tackle the bug, said the police would not be the only ones going into

work.

Between 40% and 50% of the UK's employees would be called in

over the bank holiday - many of them to ensure that computer

problems were solved before the start of business after the break.

Acpo said police forces were on target to make their systems Year

2000 compliant in time for the millennium.

So far £12m has been spent updating networks including force

computers, the Police National Computer and fingerprint database.

'No special plans'

The Cabinet Office played down the significance of the Army's

involvement in emergency planning for the millennium.

The discussions were part of a regular liaison between the emergency

service and the army to ensure measures were in place to deal with

any civil emergency, a spokeswoman said.

But there were no special plans for the millennium.

She said: Under normal circumstances, any possible emergency that

might arise might have some sort of contingency plan. That's normal

procedure.

There are no special plans for the millennium. There are normal

plans in case anything happens.

An Army spokesman at the Ministry of Defence confirmed that the

police and army officials had begun talks.

But he said: These discussions are at an embryonic stage and no

commitment has been made by the army.

We are open to approaches and we are well placed to assist in

certain areas, he said.