Posts filed under “Derivatives”

Fill ‘er Up — with Unregulated!

Abstruse Goose: Fill it up with unregulated:

 

Abstruse Goose

Category: Derivatives, Humor, Regulation

9 Biggest Banks = $228.72 Trillion in Derivative Exposure

Via Demonocracy, we see this basic take on derivatives: A derivative is a legal bet (contract) that derives its value from another asset, such as the future or current value of oil, government bonds or anything else. Ex- A derivative buys you the option (but not obligation) to buy oil in 6 months for today’s…Read More

Category: Derivatives, Digital Media, Regulation

Barry Ritholtz Washington Post March 10 2012 ~~~ Last week, Greece officially defaulted on its debt. (Unofficially, it defaulted long ago.) This formal default on about $100 billion triggered payment of $3 billion in credit-default swaps. These are the non-insurance insurance products that pay off in the event of a default.Let’s take a closer look…Read More

Category: Apprenticed Investor, Derivatives, Regulation

Final Thoughts on GS Controversy

I just did a phoner on Bloomberg TV on Goldie, and I suspect this meme has just about run its viral course. To me, the key takeaways are as follows: • Publicly Traded Banks: When firms shifted from Partnerships to publicly traded banks, their priorities changed. • Profits First: Meeting quarterly profit estimates became job…Read More

Category: Corporate Management, Derivatives, Media

Credit-default swaps are masquerading as financial products

> My Sunday Washington Post Business Section column is out. This morning, we look at CDS — how they became such a dangerous aspect of the financial firmament. The print version had the full headline Credit-default swaps are masquerading as financial products. They should be regulated as insurance products. (The online version is merely Credit…Read More

Category: Apprenticed Investor, Bailouts, Derivatives

When is a Debt Default not a “Credit Event?”

In this week’s Barron’s, Alan Abelson looks askance at the non-default default in Greece. All bombast aside, what makes this issue so fascinating to me is not whether or not Greece has or has not technically defaulted. Rather, it is that there is a committee of conflicted interested parties rendering a verdict on that issue….Read More

Category: Bailouts, Credit, Derivatives

What Are Repercussions If CDS Hedging Fails?

The EU arranged Greek bailout proceeds apace, as everyone else awaits for the official default date (Greece has already defaulted in my book, but I am in the minority). Hedged sovereign debt investors must feel like they are waiting for their wealthy grandfather to die so they can get to the reading of the will….Read More

Category: Bailouts, Derivatives

Dinallo Testimony

Eric Dinallo’s Testimony to Congress, November 2008 on (Naked) Credit Default Swaps

Category: Derivatives, Regulation, Think Tank

Our story thus far:  The Commodity Futures Modernization Act of 2000, sponsored by Texas Senator Phil Gramm as a favor to his wife Wendy (who sat on the Board of Directors of Enron, which wanted to trade energy derivatives without oversight) was rushed through Congress in 2000. Unread by Congress or their staffers, it was…Read More

Category: Derivatives, Really, really bad calls, Regulation

ISDA: Suckers Wanted

“The International Swaps and Derivatives Association said on Thursday that based on current evidence the Greek bailout would not prompt payments on the credit default swaps.” > Here is a question for the crowd: Exactly how brain damaged, foolish and stupid must a trader be to ever buy one of these embarrassingly laughable instruments called…Read More

Category: Derivatives, Really, really bad calls