Satyajit Das's Blog - Fear & Loathing in Financial Products Fri 2009-10-23 09:44 EDT
OTC Derivative Regulation Proposals ? Neat, Plausible and Wrong!
Proposals for over-the-counter (OTC) derivative regulations are consistent with H. L. Mencken?s proposition that: "there is always a well-known solution to every human problem--neat, plausible, and wrong." A central omission is the speculative use of derivatives. Industry lobbyists focus on the use of derivatives to hedge and manage risk promoting investment and capital formation. While derivatives can play this role, the primary use of derivatives now is manufacturing risk and creating leverage.
fears; financial products; loath; neat; OTC Derivative Regulation Proposals; plausible; Satyajit Das's Blog; wrong.