Derivatives: The Unregulated Global Casino for Banks

Quote from Martinghoul:

This is 100% correct and there's a lot of work and analysis that lots of people are doing to try and understand the fragility issues. And yes, this work is needed and useful, but none of it uses notional values as a starting point. Only ZH and his ilk keep putting these ridiculously large numbers forward for shock 'n awe purposes, which actually betrays their total ignorance of the subject. However, I think most people are aware now that it's a bunch of bollox.
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Agreed. The problem is we might be looking at a black hole here. Schouldn't we better be thinking about the root of the problem instead?
I mean we are trying to chase a runaway train here trying to understand the whole complexity. This is what I call the arrogance. Why not stick to the things we do understand and take it from there?

Re. the numbers and ZH: I stopped trying to understand the intentions of those people. The numbers are irrelevant anyway.
 
Quote from pythontrader:
Agreed. The problem is we might be looking at a black hole here. Schouldn't we better be thinking about the root of the problem instead?
I mean we are trying to chase a runaway train here trying to understand the whole complexity. This is what I call the arrogance. Why not stick to the things we do understand and take it from there?

Re. the numbers and ZH: I stopped trying to understand the intentions of those people. The numbers are irrelevant anyway.
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Well, the root of the problem is, unfortunately, political and social. Humans can't deal with issues of that sort well at our current level of development. As a result, we have to deal with the system as a given and try to make sure it's as sound as can be. That's the whole point of a lot of work that's being done at the moment.
 
Quote from Martinghoul:

Well, the root of the problem is, unfortunately, political and social. Humans can't deal with issues of that sort well at our current level of development. As a result, we have to deal with the system as a given and try to make sure it's as sound as can be. That's the whole point of a lot of work that's being done at the moment.
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Well in that case this seems to be a one way ticket. This is like trying to repair the sound of your TV set when your hearing is the real problem. Wouldn't you agree?
 
Quote from pythontrader:
Well in that case this seems to be a one way ticket. This is like trying to repair the sound of your TV set when your hearing is the real problem. Wouldn't you agree?
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Well, I dunno, mate... What do you propose as an alternative? Should we all give up and go home? Yes, it all might be futile and doomed, but, guess what, maybe the world ends on 21 Dec this year? Or maybe Skynet goes operational in 5 years? Or maybe this is all the Matrix? No point in living, really, if you look at it like that...
 
Quote from Martinghoul:

Well, I dunno, mate... What do you propose as an alternative? Should we all give up and go home? Yes, it all might be futile and doomed, but, guess what, maybe the world ends on 21 Dec this year? Or maybe Skynet goes operational in 5 years? Or maybe this is all the Matrix? No point in living, really, if you look at it like that...
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use closed captioning...
 
Quote from pythontrader:
Whatever pleases your ego...
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I take it you got nothing factual to say about the topic?

In any case, the actual derivatives market risks are really not as scary as people paint them to be, especially once you net them out. What is scary is the amount of concentrated exposure to single "key" counterparties. While agressive CSAs etc have gone a long way to mitigate this, i definitely feel that a switch to a centralized clearing house or (even better) a transparent exchange-style model is the right way to go.
 
Quote from sle:
...a switch to a centralized clearing house or (even better) a transparent exchange-style model is the right way to go.
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And it's precisely where we're going, although slowly... This is one of the most important parts of recent regulatory reform, which is also being resisted by the banking oligopoly, although with less vigor. Still, I do believe the writing's on the wall...
 
Quote from sle:

I take it you got nothing factual to say about the topic?

In any case, the actual derivatives market risks are really not as scary as people paint them to be, especially once you net them out. What is scary is the amount of concentrated exposure to single "key" counterparties. While agressive CSAs etc have gone a long way to mitigate this, i definitely feel that a switch to a centralized clearing house or (even better) a transparent exchange-style model is the right way to go.
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This is really interesting. You still couldn't get my point? Your first paragraph is an ad hominem remark. The second one proves you didn't get the point.

PS: stop confusing FACTS with statistics, assumptions and opinions.
 
Martinghoul,

How do you suggest we deal with it? Wherever I look and whatever I read is full of deceit. Have you witnessed the BOJ announcement today? They communicated it three times wrong to the public and market and that is from the monetary policy setters of the 3rd largest economy in the world. Do you think anyone would take responsibility for that? Do you think you would still have your job if you worked in IR/PR or were one of the lead arrangers of a secondary offering and communicated to you investors in a completely unprofessional way?

Do you think Ben Bernanke got his press conference right? The statement was as expected but I think he made a very regrettable mistake in that he appeared way too dovish and I think the market pretty much prices in another round of QE. Its hilarious when Ben said that we all must sure that we never have another situation alike "too big too fail" while at the same time assuring the world that the Fed is jumping to your aid as soon as your equity market trades down a few percentage points.

China? Bo Xilai? First the accusations that his wife assisted or even ordered the murder of a British business man did not stick now he wire tapped the top cadre? Lol, how did he do that? How does he earn 10,000 rmb and his wife a few hundred thousand USD as lawyer and book writer, yet their son drives around in ferraries and the family fortune is estimated in the hundreds of millions? Were politicians not supposed to be role models, representatives of its citizens? I am well aware we are far away from this.

But this, in summary, is the very precise reason we are far away from ever fixing anything. Politicians, CEOs, traders, anyone is only in for the short haul, collect your bonus, and get the fuxx out of here. Hell can break lose after I am gone. Isnt that the overall mentality? Politicians who speak the truth before any election are absolutely un-electable. I wished, we could crash and clean out the whole system and start over but I am afraid this aint gonna happen.

I am not suggesting to give up, but I suggest we all start thinking where in our daily routine can we again add a little more honesty to life. Where can we start to clean up after someone just to make a change for once. Where can we compete on an equal footing without stabbing our opponent in the back like cowards. It starts with us, and yet, its very frustrating and depressing to know that the biggest cowards and those who abuse the system the most are waiting for the few who take more SHIT. Unfortunate but true

Quote from Martinghoul:

Well, the root of the problem is, unfortunately, political and social. Humans can't deal with issues of that sort well at our current level of development. As a result, we have to deal with the system as a given and try to make sure it's as sound as can be. That's the whole point of a lot of work that's being done at the moment.
More...
 
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