Highlight from the high profile Ira Sohn Investment Conference (as reported in the Financial Times 5/9/2013) recently held in NYC:
"Paul Singer of Elliott Management opened the conference with a bleak outlook for the global financial system. The billionaire hedge fund manager said "there are no safe havens" in today's markets. He said long term bonds across the developed world, in the U.S., Japan, the U.K. and Europe were all trading "at the wrong price."
"Mr. Singer also said that it was impossible to gain a true understanding of the nature of risks taken by the surviving 10 to 15 global financial institutions. He said the typical balance sheet held $150bn to $200bn equity, against $2tn to $2.5 tn of assets."
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| "Plain Vanilla...!!!" |
"Yet each institution also had $50tn to $80tn of notional derivatives - "that's trillions with a T", said Mr. Singer. He said believing it was possible to understand these risks with concepts such as "value at risk", a popular analytical framework used by banks to assess trading risk, was "naive"...
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| "CU Derivatives: Just a Little Fishy" |
Those same "Big T" institutions will be the counterparties on credit union derivatives transactions....
Q: If you had to bet your CU's financial health on "one roll of the dice", who would you choose to partner with?
A. Mr. Singer ?
B. The NCUA Board ?
C. Your last Capital Markets "specialist" examiner?
D. The Big "T's" ?
E. Power Ball lottery tickets?
F. None of the above...
CU derivatives authority, in this economic environment, is beyond naive,
its unbelievably reckless...
2 comments:
It is unbelievably robustly reckless.
I will take a chance with E if I must. At least with the Power Ball lottery ticket you have an known probability of success.
In 1995 the Los Angeles Times published a definition of derivitives since so many people (smart or otherwise) had lost a lot of cash on them.
"Derivatives are securities that have been cut up, marked up and sold to customers who have been set up and held up by brokers who have been cleaning up while covering up their trading tracks."
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