Something will indeed explode in our face
Sir, Indeed “Credit derivatives play a dangerous game” and they could and will explode in our face, at least if Murphy has his say. That said we feel that Frank Partnoy and David Steel in their article, July 17, are not sufficiently forthright in making clear that this is just another side of that same coin that was haphazardly thrown in the air when banking regulators in Basel arrogantly thought they could drive out risks from banking, but, the way they are going, risk only to drive banking out of banking.
On July 10, in FT, Jeremy grant reported on how “Regulators ‘face challenge posed by multiple ownership’” and have to work overtime trying to identify who are the owners of all those hedge funds that are taking bets on credits in order to understand their conflicts of interests and, that very same day, Giles Tett describes how “Credit officers are hot to trot in a fired-us up market for loans” and now leave the banks to work for hedge-funds.
It seems the world did not learn enough from overly centralized economies falling into pieces, as otherwise there is no way of explaining the blind support it has given to that systemic risk factory that has been set up in Basel.
On July 10, in FT, Jeremy grant reported on how “Regulators ‘face challenge posed by multiple ownership’” and have to work overtime trying to identify who are the owners of all those hedge funds that are taking bets on credits in order to understand their conflicts of interests and, that very same day, Giles Tett describes how “Credit officers are hot to trot in a fired-us up market for loans” and now leave the banks to work for hedge-funds.
It seems the world did not learn enough from overly centralized economies falling into pieces, as otherwise there is no way of explaining the blind support it has given to that systemic risk factory that has been set up in Basel.
Frank Partnoy David Skeel credit derivatives
Basel bank regulations systemic risks
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