Those thinking y2k 'is over' have no idea what they are talking about. Here's one reason why.

Several months ago (mid-November) I attended a financial conference as a presentor for our start-up company and happened to meet Robert J.(Bob) Leuver. Bob is not a well known figure but was the number 2 man at the Treasury dept under Reagan (he was head of the Bureau of Printing and Engraving). Anyway, it was clear that he is well connected to this day. His testimony to Congress is not uncommon and he *often* consults with central bankers, especially in South and Central America.

His area of greatest expertise is obviously banking. He did not expect bank runs before the end of the year. He felt that the American banking system was in very good shape overall.

Here is his one word assessment of the banking sector in South and Central America: toast. According to *his assessment* - all the banks of South and Central America are toast and are going down hard. He stated this as fact, without hedging. No inuendo. Just a simple statement. "All of those banks there who say they have even begun to get ready, and that's not many, are 'not reporting accurately' (not his words for what they are doing - I softened them). Their financial system is going to collapse."

I emphasize that this is his assessment because, like any human being, he could be wrong.

It is interesting that he believes the big money center banks will be *better* off. (Contrary to Gary North). Why? Because Citicorp, for example, has it's own office in the foreign city. They can sever all ties with the national banks and still do business. That alone would collapse the economy there, he affirmed, but since it's collapsing already, the nations will be grateful that Citibank in, for example, Buenos Aires, keeps its doors open. (I suspect that the angry people will look for a 'foreign devil' scapegoat to blame and so burn down the Citibank office, but that's just *my* speculation.) He thinks xxxxxx Bank (a large regional US bank), for example, will be in horrible shape because they have a lot of money loaned in those countries but no way to collect it except through the national bank. Each transaction they do in those countries is totally dependent on a functioning national bank. Ooops!

He does not think we will be able to reliably get *anything* from South or Central America next year and, for some reason, mentioned car parts a couple times. (But that won't affect us, right pollies?)

And here's one for you Andy: The biggest buyers of the British Gold in the previous to last sale were the Chinese. They bought almost all of it. The Europeans did not like that and that was one of the reasons they decided to curtail the sales of CB gold. Robert J. Leuver, formerly the #2 man at the Treasury, recommends the purchase of gold. Hmmmm, it seems Andy is in good company.

Now, what does the potential collapse of these banks mean? The reader can draw his or her own conclusions. My assessment is that, if true, this will be substantially bigger than the "Baht crisis" which, as you may recall, initiated the Asian crisis and nearly caused a worldwide financial meltdown. (Which of you can honestly say you even knew what a "Baht" was before that crisis?)

Pollies are gloating, "no bank has collapsed yet". Stupid pollies. Someone should buy them a clue.

And perhaps those 'embarrassed' at having prepped should buy a clue as well. (Lots of hunger during the Great Depression - your preps may yet serve you exceedingly well.)

Further, take a look at the SEC filings for any major bank. Exposure in Latin America is *huge* (much bigger than Russia or CIS). What will the impact be? The reader may draw whatever conclusions seem reasonable.

Here's another tidbit. A friend of mine recently started a new hedge fund. It's a small fund - only about $100 million. He is clearing through xxxxxxx brokerage. When he 'signed up' he was asked, "How much leverage do you want? Two times?" He paused. "Four times?" Pause. "Ten times?" (His pause was due to shock.) He took 'some' leverage. My point is, the whole system is leveraged far beyond what most people would guess even in their *wildest* speculation. This, my friends, is why y2k did, and *still does* scare the caca out of the Fed. They are trying to drown their sorrows in liquidity (but may soon need to turn to booze.) The liquidity injection has of course made the situation worse - much worse. The Fed has brought us to the edge of a very high cliff. Now, in the new millenium, we are ready to step forward.

The market has been on a wild rampage. It may continue for a few more days, but I speculate that the life of this bull is measured in days, not months. Once it goes there will be no stopping it. The unwinding will be unlike anything ever before witnessed on this planet. I expect the system to effectively seize up, not from y2k glitches, but simply because there is such an indescribable dislocation in place that a controlled return to 'normalcy' is impossible. Greenspan has not allowed the market to purge itself of excesses in what would be a painful but relatively controlled manner. The infusion of capital beginning in the Fall of '98 was politically, not economically motivated. This infusion has not only continued unabated but has accelerated sharply through the end of this past year. (The Fed is very afraid, but not of power outages!) My point: don't put that cash stash of yours into a terminally ill bull. I think his rage is the result of a large brain tumor.

Now, if banks in Latin America do fail, don't expect it to happen in one day and don't expect it to hit Reuters by Monday afternoon (or for weeks/months/ever). I'm certain, however, that by noon on Monday the pollies will be claiming that the banking system is 'fine'. Stupid pollies.

As for my own expectations, Gary North would classify me as an optimist because I have in my portfolio the most digital of all assets: puts (S&P 500, LSZ series). The purchase of these was 'optimistic' because it posits the survival of enough infrastructure that being correct has meaning. I need power, the exchanges to function, a reasonably intact banking system and the ability to buy something with any $'s I may receive. So far so good.

P.S. I had a can of hash for lunch. Yummy!

-- Me (me@me.me), January 01, 2000

Answers

Thanks Me,

I live in Miami and we are closely interconnected to Latin America. I appreciate your post and will be watching closely.

-- JoseMiami (caris@prodigy.net), January 01, 2000.

This is a most interesting post. I have yet to dig into my pre-paid expenses (assets) but I have an interesting theory of my own.

My business just tanked this year because of all the people that could put off making a decision until later because of y2k. Those folks have lost their excuse this year. The Y2k nazi is no longer...systems will be changed now as soon as a patch is available in the hopes that it will fix a pressing problem.

The smaller companies and organizations will actually be able to deal with things on a more manual basis and should be in a great postion to pick up on business that the larger entities are missing out on. They are missing out on it because their computerized systems all replaced people and now those people no longer function in order to feed those that are remaining with meaningful work. Really it is small is good ... big may be unhealthy.

This will be true of the SOTB (South of The Border) Banks if they replaced very many people and then didn't fix the computers.

-- William R. Sullivan (wrs@wham.com), January 01, 2000.

Me,

Assuming that you are on the level and with us you are on the square, Latin America could be interesting. I think Greenspan did the only possible thing...bail out his boss, the Philanderer in Chief as he faced the Impeachment. Then, with only 10 months to go, Greenie couldn't hit the reverse button at all.

Sounds like a wild ride is in the offing...

-- K. Stevens (kstevens@ It ALL went away 20 Hours ago.com), January 01, 2000.

It is my understanding that we buy ball bearings from Brazil. Am I right?

-- Earl (eshuholm@tstar.net), January 01, 2000.

And kudos to Kc Stevens for being consistent with his email address.

-- Butt Nugget (catsbutt@umailme.com), January 01, 2000.

Me,

Hope this isn't a dumb question. What is "CB Gold" and what is LSZ series ( I know what a put is)?

And, the Brits. Did they clear out as much gold as they said they would I heard half of their stash. How much of their gold did the Chinese buy?

Thanks for your insight. The best post I've read all weekend.

-- jimbo (alurker@lurker.com), January 01, 2000.

CB = Central Bank

LSZ is a put series with the 'underlying' being the S&P 500 and the expiry being December of 2000. A variety of strike prices available. I'm betting that the S&P 500 goes down this year.

For any wondering, I am legit. I posted once with my real name and address looking for those in the know to come forward and speak with certain congressmen. Some thought I might be related to "Cokie" (sp?) I'm not.

In my previous life I was an Investment Banker.

-- Me (me@me.me), January 01, 2000.

Sorry, missed a question. The Chinese bought "almost all" of the gold. I don't know any more than that. But, if you recall, the gold sale went off at a price substantially above spot.

I don't believe gold will take a substantial hit tomorrow. If it does, a snap back within several days will be expected. I'm not selling.

If I were to guess wildly (take a wild guess) I would say that the markets are up sharply for hours to days, but that the major sell-off begins within two weeks. N.B.: WAG

NB = "nota bene" = note well

WAG = wild burro guess

-- Me (me@me.me), January 01, 2000.

Me,

Thanks very much for the post - it's now over on usagold, see what they'll make of it. I think it will be a rollercoaster the next 6 months, y2k or not. Interesting about the Chinese as they've just announced they will be trading gold on their own terms in their own market. It fits.

-- Andy (2000EOD@prodigy.net), January 01, 2000.

Very interesting me. I recently learned (but cannot confirm) that Venezuela is the US's largest foreign import of oil. Even the horrible storm last month, the changing of the gov't down there, and now a possible bank collapse, I suspect we need to watch oil prices very carefully.

-- Mello1 (Mello1@ix.netcom.com), January 01, 2000.

Regarding gold and LA "toast"...

FOA (01/01/00; 20:34:38MDT - Msg ID:22008) Comment mhchuck (12/31/99; 19:13:55MDT - Msg ID:21928) Just Another Squashed Bug.---------------- ----and---------- mhchuck (12/31/99; 19:22:25MDT - Msg ID:21931) Do We Have Free markets? Yuk, Yuk, what an industry, if the price of the item they are producing rises...they all go bankrupt. Please come and get me, I'm ready for the nuthouse.---------------------

Hello and welcome mhchuck,

Well, if you have come this far down the gold trail, we might as well finish the hike. The end of this is closer than many think. My dad always said don't worry about the big bully in town. There is always someone bigger and tougher than him wait for the chance to ????? The same is true in the money power game. I never said that the Euro was not going to be a tough "dude". He is and he will work the dollar over with the help of gold. We are only pointing out (to the average person) that the timeline of the dollar is ending and the transition will be sudden and harsh on dollar asset holders. Truly, gold will not be an "innocent" bystander in this fight. It's historic power to break empires will certainly come into full use. Again, bullion will be the survivor with the most leverage in this battle. Yes, the gold mines will still have valuable reserves and be in full operation as this all unfolds. It's only the equity holdings of these "businesses" (not all, just most of them) that will be ransacked as the gold marketplace is up-ended.

FOA

-- Andy (2000EOD@prodigy.net), January 01, 2000.

Me: Thank you posting your interesting insights. IMO, the collapse of Wall Street will be due directly to events overseas beyond our control. I've read that economic collapse in Brazil would bring down the rest of South America. I think you're on target. Keep posting updates.

-- dinosaur (dinosaur@williams-net.com), January 01, 2000.

Good thread everyone. Many have stated that it would take an outside event to bring this market down and I am inclined to agree. I wonder what snowballing hedge funds would look like?

I have seen some amazing things by the PPT and I, like many others, have suffered losses at their interference. Perhaps I am a little gun-shy but their power is awesome so I am curious how others feel about the PPT to control issue on a more global scale. After all, they have had plenty of practice.

Given that y2k causes some sort of digital paralysis and there are bank runs and an inability of these banks to function, is rescue a possibilty? It would be desparation time and all the stops would be pulled out. Would the rescue effort succeed?

-- Mike Lang (webflier@erols.com), January 01, 2000.

Thanks for the post.

I looked up export info on some So. American countries. If banking there is a mess, I guess it could effect business viability of exporting enterprises, affecting exports to the US. Looks like a lot of raw materials come from So. America., could we be in for some shortages and price increases?

BRAZIL: iron ore, soybean bran, orange juice, footware, coffee, motor vehicle parts,machinery.

VENEZUELA: Petroleum, iron ore, bauxite (ore for aluminum)

COLOMBIA: Petroleum, coffee, coal, bananas, flowers.

ARGENTINA: meat, wheat, corn, oilseed, manufactured goods, fuels.

PERU: copper, zinc, fishmeal, crude petroleum and by-products, lead, refined silver, coffee, cotton.

BOLIVIA: metals, natural gas, soybeans, jewelry, wood.

This is all I have time to post now. Any comments regarding shortages or investment stategies welcome.

-- Jack (marshall2@iname.com), January 01, 2000.

Would the rescue effort succeed?

-- Mike Lang (webflier@erols.com), January 01, 2000.

======================================================================

More to the point would they want it to succeed???

-- Andy (2000EOD@prodigy.net), January 02, 2000.

Good question, Andy. They know there is a point at which they will be unable to intervene successfully and will sit back and watch the devastation.

At this time they can and will make a fortune in any number of ways. The problem is that neither you nor I have access to their agenda.

-- Mike Lang (webflier@erols.com), January 02, 2000.

me:

Any more updates or details from your conversation with Leuver?

-- dinosaur (dinosaur@williams-net.com), January 02, 2000.