We forget it but it was really really low. The level in the market was not that high, very low in fact. Not the high it reached before the recent big rally. There was plenty of money around in cash and that attracted margin accounts. A lot of participants were simply speculating and making big bets with funds they didn’t have. The margin requirement was 2%. Even a slight change in the fundamentals would increase margin requirements making the market an attractive speculative vehicle. I think we’re heading into a long period of volatility. A big factor is the over-the-counter derivatives business. For the first time ever, there are more positions there than there were before 9/11. So you’ve got all these highly leveraged positions which are vulnerable to a lot of uncertainty. There’s also a tremendous amount of speculation. People were all trying to take advantage of one another. For example, if a bank or hedge fund is too bullish, there’s the chance that it might buy from a fund that has borrowed too much. Or a fund might sell too soon and give people the chance to get a good price. So I’m not surprised about the number of liquidations we had this summer. The volume was extraordinary. The OCC shutdown led to further liquidations and created a domino effect among the hedge funds and others. Many are simply not doing business any more. There was a lot of uncertainty and a lot of hedges being unwound. The problem is that it took a long time to unwind those positions and a lot of institutions were left with too much leverage. One of the things you should look at is how people are pricing derivatives and how you can take advantage of that. Now, the big problem with derivatives is there are too many different derivatives for the same underlying products. You’ve got derivatives on the derivative itself. You’ve got them on indices. If you’re looking at an index, you’ve got five to six futures options on the same product. You don’t have any confidence that anyone knows what the real value is. So if you look at a commodity index, if someone wants to unwind a position, which one should they unwind? The problem is we have no confidence that the price will actually move. Now what did happen is people started holding large amounts of derivatives hoping to get a better price when the crisis came. They borrowed a lot of money to do that. I know someone who borrowed $100 million, and he took a huge exposure on the options but none of it was for hedging or other derivatives, it was to try to make a profit. I do think we’re going to see turmoil ahead. If we have a declining market, how does one unwind positions and hedge? Because it’s virtually impossible. The question is how does one price the derivatives. It’s not easy. You’ve got the option of the Fed intervening and injecting liquidity to keep the market up. In the meantime, there are going to be a lot of people who are going to be holding derivatives, trying to make money. But if we have no confidence in the value, and we don’t know what price to base things on, how can you hedge or make a profit? You can’t. So we’re going to have this wild ride, a lot of selling. Of course, we don’t know who will buy when the market begins to decline again, which is what happens. It’s like a roller coaster ride, just starting the descent. So, I don’t think we know how the thing is going to evolve, but I think we’re going to see a period of large price drops. For example, I used to be a very much fan of AIG because they did derivatives very well. I’ve come to think they’re over-rated. You have to be a very good salesman to sell derivatives. You have to know a lot of products. So, AIG’s derivatives business was very profitable because they knew all the products. But it’s not the same with other derivatives. You don’t know where your assets are invested. What is a home loan bundled with sub-prime mortgages or was it an insured bond or CDO? These are issues that need to be looked at. AIG was great at selling insurance to companies but now they just got burned in the credit market. They had no comprehensive view of the risk. So, it’s possible that AIG, because of their derivatives expertise, can come out ahead of the rest of the pack. That’s true in corporate America also. Corporations do a better job than individuals when it comes to derivatives and other complex securities. When you look at companies that have been hurt the most, they are usually those that had the lowest cost of capital. So, companies that have a lot of derivatives in their portfolios tend to take on more risk. So they’re subject to a lot more of these credit risks and they are very vulnerable to a downturn. It’s a lot better for a company that has a lot of risk to have a low cost of capital and take a lot of risks than not. There’s a better chance that they’ll make it. But at the same time, that makes them more vulnerable to a big downturn. So it’s like being careful with a loaded gun. When you point it at the robber, the robber may get away, but if he hits the wrong person, there’s going to be repercussions. So we see a lot of that in the market. All those derivatives leads to overconfidence. People felt that they had a lot of leverage and all the money would be coming in. So, they borrowed a lot and didn’t have enough dry powder in the reserves to pay off if it all hit the fan. They were like a high school prom queen who buys a Rolls Royce thinking it’s the latest fashion. But the problem is the dress doesn’t fit and so she’s got to go to the prom with a different dress and find a ride. I think there’s a danger of panic, but so much of this derivatives business is done in secret. There is no leverage, so as long as the borrower and borrower’s banker know about the transactions, nobody knows if you’re lending more than you can pay back or less than you can pay back. I think we have a real problem when one institution, even if it’s a bank, can start off with one position and end up owning a bunch of hedges and have a lot of problems when the bottom drops out. I think you’re talking about a system problem that might not be resolved until something that big hits the ground. That’s correct. The problem has always been about leverage, but it’s more complicated now than in the past because we have so much derivative exposure. When you are playing around with derivatives and derivatives on derivatives, the situation gets confused. Even a banker doesn’t know what he has to begin with. A banker may think they’ve got only one position but it turns out that they have dozens of derivatives in this position. They can be left holding the bag. There’s the problem with how much to invest, if you want to protect your balance sheet. For example, we talked about AIG. There was a time when they had a lot of derivative positions because they were doing insurance business but they were a pure insurance company. They have nothing to do with Wall Street. Another issue is how much of a return do they need to obtain in order to be profitable? But this is something that isn’t available at all in the credit markets. If I were a bank, I think I’d try to reduce my risk as much as possible. It’s better to have no risk. So the problem is there isn’t a lot of money on the street and there’s a lot of pressure on banks to make money on what they’ve got because their loans are worthless. So, they have to find money from somewhere. Even AIG which is a company that had its own revenue stream broke. Now they’re taking it out of banks. They’re taking it out of pension funds. Who knows where they’ll get the money? When you add it all up, when you add up all the risk, there’s not a lot of confidence in anything, it doesn’t make a lot of sense. Of course, there are a lot of people still making money, doing business and doing investment banking. But they don’t know if their positions are properly hedged. The same risk is just multiplied many times over. It’s no wonder we have such a bad credit situation, but no one can find the solution. I don’t know if the solution is in derivatives or what it is. Let’s hope it’s a