May 09, 2005

Market risks and counter-party risks, they all live in the same world.

Sir Mr. Greenspan recently reminded the participants in the derivatives markets that the counter-party risks are still linked to the market risks, one way or another, which is true, whether you wish to ignore it or not. As we all operating more and more in one single world market it behoove us to remember that if you insure your office property against fire with an insurance company that happens to own the building where your office is located, then, if fire breaks out, your insurer might be in much worse shape than you.