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#104877 - 06/16/05 03:04 PM GOB's Losing Bet in the Derivatives Market
Marty Online   happy
Derivatives: it's an area of the finance markets referring to highly speculative investments made by daring money managers. Well, you wouldn't know it (because no one ever disclosed it) but the Government of Belize has been playing and losing in the derivatives market and GOB's money managers have been doing it with your money.

A Ministry of Finance document released by the unions today shows alarm in the Ministry over the expected loss of $10 million on what's described as a "u.s./yen swap conversion." This term refers to what's known as a currency swap where basically the Government of Belize bet one currency against the other. In the year 2000, the Minister of Finance at the time Ralph Fonseca designed a transaction where the Government of Belize basically bet that the value of the Japanese Yen would decrease against the value of the U.S. dollar over a 5-year period. The bet was for the value of an $80 million Solomon Smith Barney bond and at the end of it Belize could have gained by the percentage that the yen had weakened against the U.S. dollar.

Well, guess what? It didn't weaken; in fact, the currencies went sharply in the other direction: the dollar got weaker and the yen strengthened, meaning that the Government of Belize gambled with your money and lost...actually it lost big. We presume this Ministry of Finance figure of $10 million to be an estimate that would put the currency difference at 25% of the $80 million. But whatever the final figure turns out to be, those we spoke to say it will be at least $8 million and that is payable when the bond comes due which is at the end of this month.

We note that though the transaction involved a huge amount of the country's money, no disclosure of any kind was, or to date has been made of the intent to carry out the transaction or the expected loss from it. We note that generally, sovereign nations stay out of the derivatives market because it is considered too risky.

#104878 - 06/16/05 05:08 PM Re: GOB's Losing Bet in the Derivatives Market
tradewinds Offline
It sounds like some of GOB's money managers have a gambling problem. Derivatives plays that blow up have been the downfall of a lot of firms, like Long Term Capital Management.

#104879 - 06/16/05 05:52 PM Re: GOB's Losing Bet in the Derivatives Market
papashine Offline
This stuff never ends frown
Reality..What a concept!

#104880 - 06/16/05 06:58 PM Re: GOB's Losing Bet in the Derivatives Market
captjeff Offline
here you go much more bohica= bend over here it comes again .. more strange things seem to happen in belize.. I truly wish them peace..
Living The Dream Every Day!

#104881 - 06/17/05 01:25 AM Re: GOB's Losing Bet in the Derivatives Market
Now Danny Offline
Allways put lotion or vaseline on every day to make it easire to take it up the butt. Another day, another way. confused

#104882 - 06/17/05 01:49 AM Re: GOB's Losing Bet in the Derivatives Market
papashine Offline
I betcha if it had gone the other way the 8 or 10 mil would'nt have made it past a couple of pockets, it was a lose/lose deal for Belize any way!
Reality..What a concept!

#104883 - 06/17/05 02:38 AM Re: GOB's Losing Bet in the Derivatives Market
reaper Offline
4$-1$ or more seems to be looming in the shadows. cool


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