Posted on 08/25/2008 3:19:27 AM PDT by TigerLikesRooster
Worsening the Fallout
By: Financial Armageddon Sunday, August 24, 2008 11:14 PM
Sectors: Consumer Staples , Finance
Symbols: NYT, UBS
When over-the-counter derivatives really began to gain traction in the financial world, Wall Street insiders and industry regulators constantly proclaimed their virtues -- and ignored their shortcomings.
Among other things, they argued that these paper promises would allow complex risk to be broken down into its constituent parts and redistributed to those who wanted and understood the exposure they were taking on.
In truth, no one really knew what it was they were slicing-and-dicing, what new risks were being created in the process, and where all this stuff was actually ending up.
Proponents also claimed that new age finance would make the system more durable because risks would be disbursed far and wide, rather than being concentrated in a small number of institutions or portfolios.
(Excerpt) Read more at istockanalyst.com ...
Ping!
Never had a hard time with derivatives. Integrals were always tougher for me.
Excellent article.
The dike holding back financial “disorder” continues to spring tiny leaks and the Fed - Treasury is running out of fingers to plug them. More than a trillion dollars worth of fingers in the dikes so far -
Me too.
Especially Integration by Parts.
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