Here’s another blow to the meme that the derivatives market is efficient at dispersing risk. It comes from a new study by Fitch. The report indicates that derivatives use by companies is fairly widespread but that the concentration of the risk is overwhelmingly found to rest with just five banks: JPMorgan Chase, Bank of America, […]
Posts Tagged ‘derivatives’
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The Banks Aren’t Ready To Give In On Derivatives Yet
Posted by Tom Lindmark on May 28th, 2009
A week or so ago it looked like everyone was on board with the plan to put most derivatives into a central clearinghouse and allow certain bespoke contracts to be traded outside of it but with disclosure. Well, guess what? The big banks are working behind the scenes to alter things. You didn’t think it […]
A Realistic View Of The Reason Derivatives Exist
Posted by Tom Lindmark on May 25th, 2009
This is maybe the best summation of the derivatives market that I have read. It is from David Murphy who writes the excellent Deus Ex Macchiato blog. He is responding to another blogger who waxes poetic about the golden age of derivatives. Oh grow up. I mean, really. Derivatives were always about tax arb and […]
A Warning We Should Have Heeded
Posted by Tom Lindmark on May 23rd, 2009
Nice article in the Telegraph about Brooksley Born who tried and failed to get former President Clinton to regulate derivatives. Admirably independent, Born issued warnings about the systemic dangers posed by America’s vast and entirely unregulated “over-the-counter” derivatives market. Worth some $600,000bn (£375,000bn) today, having grown 20-fold since Born first raised the alarm, there is […]
Treasury Proposes Derivatives Regulation
Posted by Tom Lindmark on May 13th, 2009
Well it’s only been what eleven years since Long Term Credit almost brought down the financial system and the world was introduced to the word “derivatives.” They were a brand new concept back then and appeared to take the entire financial system, or at least the regulatory arm of that system, by surprise. A few […]
Simon Johnson On Derivatives-A Scary Theory
Posted by Tom Lindmark on March 9th, 2009
Simon Johnson has an excellent post on the Baseline Scenario. He uses President Obama’s comment about blogs as a jumping off point for a scary discussion about derivatives. But the President knows all this, which suggests another interpretation for his remarks. Perhaps the financial situation – e.g., in and around derivatives – really is too complex for anyone […]
