From: Hallam-Baker <hallam@ai.mit.edu>
Date: Thu, 6 Jun 1996 11:56:21 +0800
To: "Vladimir Z. Nuri" <cypherpunks@toad.com
Subject: Re: whitehouse web incident, viva la web revolution
In-Reply-To: <4p370g$r77@life.ai.mit.edu>
Message-ID: <31B5C131.167E@ai.mit.edu>
MIME-Version: 1.0
Content-Type: text/plain


Vladimir Z. Nuri wrote:
<Uninformed crap>


Its worth pointing out that a complaint to an editor is not 
necessarily pressure. Did the Whitehouse threaten to sue 
HotWired? What _pressure_ was applied?

I find Meeks' style somewhat tiresome. It is tabloid jornalism
rather than reasoned argument. His dislike for the Clinton is 
well known - he recently accused the administration of being
fascist. I know of no evidence that the Clinton administration
has a genocide policy, it is an insult to the 10 million civilians
murdered by Hitler to use the term facist simply as a term of abuse,
especialy if it is being used as a substitute for an argument.

Point of fact: the skeleton closet does not know how traded options
work.

If one sells a traded option one is liable to pay the broker if the
market moves the opposite way to that hoped for. Normally the broker
asks a client to put up a deposit or "margin" to ensure that the
broker can recoup the money. In this case the broker knew that Hilary
had good credit and so accepted only a token deposit as "margin". Had
the market moved in the opposite direction Hillary would have been
liable for very much more than $1000, she was liable for hundreds of
thousands.

In most cases it is profitable to sell options, it is only if the market
moves in the "wrong" direction that one can lose out. In such cases the
losses are unlimited - the potential profit being fixed. This is why
most punters buy options - the potential loss is limited. 

You can see a similar effect in the market each time there is a "short
squeeze". A lot of people bet on Netscape going down in price because it
was overvalued. The number of short positions turned out to be higher
than the number of shares on offer which meant that many people were
having to buy shares at high prices to cover their positions. This is
how lack of confidence in a stock can send it through the roof. The free
market - don't you just love it?


		Phill