RE: Re: Re: NASDAQ Question

["David Shemano" <dshemano@xxxxxxxxxx>]

Jim Devine wrote:

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>No. Assuming the calculation is right, the $4.7 trillion would represent a
>value that could never be realized because if investors tried to liquidate
>their portfolios, prices would come down and they would "lose" the $4.7
>trillion that they never had in the first place. Likewise, if everyone on
>pen-l promised to given everyone else a million bucks, we'd all be
>fabulously rich until we tried to spend it. The astonishing thing is not
>the "wipe out" but the illusion that there was anything there to be wiped
>out.

the problem arises to the extent that the $4.7 trillion was perceived as
real and used as collateral for loans, etc.

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Directly on point, my wife works for an entity at Merrill Lynch that lends
funds to high net-worth individuals, which loans and lines of credit are
secured by securities.  The loan to collateral ratio is usually in the 2:5
to 2:3 range, which is obviously pretty good for the lender.  They have been
extremely busy the past few week liquidating positions, but have been
successful in covering the loans and do not have any existing defaults, to
my professional disappointment.

David Shemano