Apparently, Koskinen Would Drop To His Knees and Bark Like a Dog If Clinton Were To Ask : LUSENET : TimeBomb 2000 (Y2000) : One Thread

As shown on a thread below, Koskinen says the markets are reflecting confidence in remediation. This is laughable.

Today's Section C headline in Wall St. Journal:

"Worries of Year 2000 Disruptions Spark Rash of Corporate Offerings"

A separate headline in the Fund Track section: "Y2k Fears Chill the Junk-Bond Market"

Among observant lay people, Koskinen is embarassing himself. Maybe he's building goodwill with some future employer on Wall Street. I've seen better performances by unknown challengers on WWF.

-- Puddintame (, August 23, 1999


Apparently the government has adopted a "Wait & PEE" approach to Y2K. They will WAIT until TSHTF, then they will piss all over the place spreading the blame around as there will probably be plenty for everybody.....

-- helium (, August 23, 1999.

Send Special K(oskinen) as copy of the State department information listed below. I see a conflict of interest here and they don't have the same spin doctor.

-- y2k dave (, August 23, 1999.

Koskinen is a reptile. Look closer, I'm not joking.


-- Icanspotem (icanspotem@amileaway.bud), August 23, 1999.

Helium, I'm going to briefly depart from my standard stoic impartiality and say, "LOL"!


-- Scott Johnson (, August 23, 1999.

"Apparently, Koskinen Would Drop To His Knees and Bark Like a Dog If Clinton Were To Ask"

Can I watch?

-- R (, August 23, 1999.

Bet it's Koskinen who would mudwrestle Maria. He's probably been itching to post here and take up the challenge :)

-- slippery (he@already.does), August 23, 1999.

Puddintame, I'm offended. Groooowwwwl.

-- BigDog (, August 23, 1999.

Question: (okay 3 questions)

What does John Koskinen's personality/believablity have to do with the possible severity of Y2K? Is John a computer that might fail after 1/1/00? Why all the talk about Koskinen, and what difference does it make what he says, good or bad?

I thought you Doomers have already written off the Government as a source of accurate information. Is this just your way of saying naa- naa I told you JK was a liar! Or is it just another little ceremony you Doomers hold to pat each other on the back and pump up each other's egos.

-- (, August 23, 1999.

What does John Koskinen's personality/believablity have to do with the possible severity of Y2K? Is John a computer that might fail after 1/1/00? Why all the talk about Koskinen, and what difference does it make what he says, good or bad?

That's the point, DS. There's so much spin on BOTH sides (and up & down the middle) that NOTHING is to be believed anymore. Are you a computer that might fail after 1/1/2000? No. It's not about being right or wrong. I can tell you now, EVERYONE is going to be wrong, because it's not going to turn out exactly as ANYONE predicts. Everyone just make some prudent preparations and hope for the best. It's all anyone can do now.

I follow the information because I find the issue fascinating. Not like the usual political scandals, this actually MEANS something. But following the information this late in the game isn't going to be educational - too much spin on all sides. Everyone has an agenda. I've made my mind up and am preparing best I can.

-- Jim (x@x.x), August 23, 1999.

are you sure after "dropping to his knees" K would be barking for Klinton???

-- Hmmm (wondering@time.togo), August 23, 1999.

I pay special attention to all 'sides' of this subject. I want to know what TPTB have to say because this is what my family is hearing, I want to have intelligent replies and thoughtful conversation so that they will hear all sides not just media spin.

-- Sammie (, August 23, 1999.

Sorry, J. Koskinem's credibility has everything to do with Y2K because he is the man we have "allegedly" entrusted with our National Security no less. Unless of course he is simply a PR shill for Willy Peter.

This guy is losing big cred in the financial world at least. No sane person could possibly look at these two articles and come up with anything different. Investors are dumping junk bonds in a major FTQ and corporate treasurers are issuing so much debt that they can't see the numbers on their Excel spreadsheets due to the sheer number of zeros. I would be willing to bet Kosky's article was in direct response to these.

For educational and research purposes only.

Y2K Fears Have Investors Jumping From Junk-Bonds By AARON LUCCHETTI Staff Reporter of THE WALL STREET JOURNAL Investors are yanking money out of mutual funds that invest in high-yield, high-risk junk-bond funds, and many portfolio managers say year-2000 jitters could make life tough for them in the next few months. "We think the market is cheap, but there are no near-term reasons why it won't stay cheap," says Jerry Paul, portfolio manager of the Invesco High-Yield Fund. Concerns about the effect of the Year 2000 on both computers and corporate profits could keep junk-bond demand cool for awhile, Mr. Paul says. And analysts note that dealers are growing warier of holding large inventories of junk bonds before the end of the year, which coul further depress prices. Supply Exceeds Demand' All this underscores a growing realization about the Y2K impact on the markets. While the end of the century is raising challenges for computer chips, many investment professionals say it's also affecting how investors view more speculative investments, including junk bonds. In the past four weeks, investors have pulled out more than $1.2 billion from junk-bond funds, which now have assets totaling $111 billion, says AMG Data Services, Arcata, Calif. During the same time period, investors have put money into higher-quality corporate bonds. "Right now, supply exceeds demand" in the junk-bond market, "and most of it seems related to Y2K," says Roger King, portfolio manager of the Dreyfus High Yield Securities Fund. Mr. King predicts that Y2K will be "one of the biggest nonevents in world history," but says many investors are taking precautions by putting money elsewhere. "It's like there's no chance of rain, but people take an umbrella anyway," says Peter Andersen, a high-yield manager at Conseco High Yield Fund. Despite the fear factor, junk-bond funds have performed admirably. Junk-bond funds have risen on average 2.5% for the year through Thursday, according to mutual-fund tracker Lipper Inc., Summit, N.J. That's a weak figure compared with many stock funds, but well ahead of other bond funds. Treasury-bond funds and higher-grade, lower- yielding corporate-bond funds have struggled because higher interest rates have hurt prices of securities in Treasury-bond and high-grade corporate-bond portfolios. Larger Stakes in Lower-Grade Stocks "The best performers are the ones that have taken the most risk," in lower-grade companies, says Harry Resis, lead portfolio manager of the Kemper High-Yield Fund. Indeed, Mr. Resis' fund has risen only about 1% on the year with a relatively safe portfolio stacked with Brated securities. The Dreyfus high-yield fund, by contrast, has large stakes in lower-grade stocks, and has surged more than 15% this year. Some winning managers in the higher-yielding assets have gotten the bonus of profitable warrants that come attached to some high-yield securities. Mr. King says the Dreyfus fund has benefited from profitable warrants in such companies as EchoStar Communications and Rhythms Net Connections. But the junk-bond market also carries a growing default risk these days. A recent report by Moody's Investors Service said more companies issuing junk bonds were defaulting on their interest payments than at any point in the past seven years. Bondholders, including those with junk-bond funds, are hurt when the companies they buy bonds from default on their debt. Recent high-profile examples include Iridium and Planet Hollywood International. "We're starting to see the default rate creep up and that's important," says Eric Jacobson, head of bond-fund research at Morningstar, a Chicago fund-tracking firm. "This is the first time since the early '90s that we have started to see trouble with defaults in the high-yield market. It's going to be more important for buyers to be sharp on their credit research."

Worries of Year-2000 Bug Spark Corporate Offerings By PAUL M. SHERER and GREGORY ZUCKERMAN Staff Reporters of THE WALL STREET JOURNAL Richard J. Almeida, chairman and chief executive officer of Heller Financial, isn't sure if the markets will go haywire as year 2000 approaches. But he'd rather be safe than sorry. So Mr. Almeida's company, a major lender to midsize and smaller companies, has raised $750 million over the past month, capping more than $3 billion raised so far this year, to square away its funding needs before any possible market turmoil related to Y2K. "It was really anticipating the fact that there could be market disruptions in the fourth quarter," Mr. Almeida says. "Our feeling is there would probably be a lot of adverse psychology, so we should try to anticipate our funding needs early." U.S. companies are scurrying to raise money, in part to sock away cash before any market disruptions caused by the Y2K computer bug. Or to be more precise, disruptions caused by fear of the Y2K bug. Since May 1, $23.8 billion of initial public offerings have been completed, up from $14.7 billion in the same period last year, according to CommScan LLC, in part due to an impetus to go public ahead of potential year-2000 market problems. Meanwhile, nearly $31 billion of investment-grade corporate bonds were sold in July, up from $17 billion in June and $11 billion in May, according to Credit Suisse First Boston. And $20 billion of bonds have already been sold in August. Says Geoffrey Coley, co-head of global capital markets at Salomon Smith Barney: "Y2K has been part of the calculus in virtually every decision by corporate issuers in the last three months." It's difficult to distinguish exactly how much of the rush is from Y2K-specific fears, of course. Also driving the capital-raising drive are fears of rising interest rates by the Federal Reserve, concern about a fourth quarter that has been difficult for bond investors for the past two years, and a desire to issue before summer vacation season peaks. But executives say worries about Y2K troubles are playing a big part in the race to raise funding. Even companies with overflowing coffers are concerned: AT&T raised $3 billion in one-year securities in July, in part to ensure the company will have enough cash on hand at year end, according to people close to AT&T. "My fear is we're ready for Y2K, but will there be redemptions from mutual funds hurting liquidity in the market?" asks Thomas Capo, treasurer of DaimlerChrysler, which sold a massive $4.5 billion in bonds last week, the seventh-largest investment-grade bond deal ever. "There's a huge question of how investors will behave near the end of the year, and as an issuer it's prudent to get the majority of the year's requirements done now." Ford Motor is itself ready for year 2000. But the company was glad to get its record-breaking $8.6 billion bond deal done in July, rather than test the market later this year or early next year, after the start of 2000. "You never know what will happen and it's not a bad idea to put some money away as a precaution," says Dave Cosper, Ford's executive director of corporate finance. Corporate leaders are more prone to view Y2K as a mass mania fueled by consulting companies and the survivalist industry than as a fundamental threat to society. Few believe the financial system will stop functioning as computer clocks attempt to flip over to Jan. 1, 2000. But many corporate chiefs and investment bankers fear that investors will shift away from riskier bonds, like corporate and junk bonds, later this year and stick to cash or safe Treasurys. This could handicap companies in need of financing, causing fallout in corporate boardrooms. "If for some reason something goes wrong and a CEO turns around and says to a treasurer 'Hey, where's my funding?' [the treasurer] is likely out of a job," says Dominic Konstam, senior strategist at First Boston. "There's little upside for these guys" in waiting to raise financing later in the year. Executives may be right in being nervous about the availability of financing ahead of 2000: 58% of investors surveyed recently by Merrill Lynch said they plan to build their cash on hand ahead of Y2K, and 29% said they plan to increase their holdings of Treasurys. And 87% of corporate-bond investors expect "liquidity" -- or ease of trading without price disruptions -- to fall moderately or seriously as Y2K approaches. Moderate or serious liquidity problems are expected by 53% of money-market investors. The move to juggle funding has been notable in the market for commercial paper, the short-term securities sold by companies looking for short-term borrowing. Many corporations don't want to have commercial paper that expires, and needs to be refinanced, near year-end. So they have been replacing shorter-term instruments, which often must be refinanced every seven to 28 days, with securities maturing next year. The result: a surge in the supply of commercial paper, with spreads widening. At a recent meeting of the Financial Executives Institute, members said "they're all avoiding settlements from Dec. 30 to Jan 7," said Philip B. Livingston, president and chief executive officer of the Morristown, N.J., professional organization. "They're trying to avoid any kinds of deal closings in that period. It's going to be a dead period in financial markets." Even if big money managers stay the course and computer systems stay afloat, individuals are a wild card. Frightened by the end-of-the-world hype that the banking system will collapse, people may decide to go out after Thanksgiving and pull an extra $1,000 in cash out of their money market funds. "If we all do that, then we're creating a huge disruption of flows for those funds or institutions that hold our assets," says Mary Rooney, fixed-income strategist at Merrill Lynch. "No one knows, the Fed doesn't know, money market fund managers don't know, how much money people are going to take out." For added safety, the Federal Reserve is putting $50 billion in extra currency in circulation to cope with possible cash hoarding. The burst of new IPOs and bonds -- and expectation that more is around the bend -- has, along with a fear of the Fed raising interest rates, weighed on both the stock and bond markets. Last week the average spread, or difference, between yields on investment-grade bonds and comparable Treasurys was 1.63 percentage points, according to Moody's, the widest spread for any five-day period since early November 1998. Though he isn't taking any chances, Heller's Mr. Almeida doesn't actually expect a funding shortage to develop in the fourth quarter. "My expectation is that you will be able to raise money in the fourth quarter, as so many people have anticipated this that there won't be too many issuers out there," he says. "There will be funds that people will want to put to work at the end of the year." Indeed, some say investors can take advantage of the Y2K skittishness. Because yields on securities such as corporate and mortgage-backed bonds remain high in relation to Treasurys, even as Treasury yields stay near 6%, investors can buy top-grade bonds at higher yields than just a few months ago. "It's generally a pretty good time to increase buying," says Brad Tank, director of fixed income at Strong Capital Management. He says the best opportunities are in bonds of government agencies and high-quality companies. Others take a more philosophical view. Says Devin Thorpe, treasurer of Usana in Salt Lake City: "If the banking system doesn't work, having more cash available is the least of your worries." * * *

-- Gordon (, August 23, 1999.

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