It is very difficult, if not impossible, to put a value on risk in a pool of potentials that have no historical values to use for actuarial calculations.
The math regarding derivatives is very complex, but the real problem is that the data to perform the analysis doesn't exist, i.e. it is impossible to project the results of an event that has never happened before. We have, at most, about six months of failure data, and that is tainted by the government infusion to Bear Sterns, and recent bank failures. I wrote some really elegant algorithms for the Resolution Trust to track assets and debt during the Savings and Loan debacle, but that was only mortgage based failures, skewed mostly by fraud. It would be a real challenge to tackle tracking and projection for derivatives. But someone would have to pay me REAL BIG BUCKS, and give me about 200 data entry clerks to enter the consolidated data. On Wed, Oct 1, 2008 at 2:51 PM, Dana <[EMAIL PROTECTED]> wrote: > interesting that you should ask that... most people say that it's > because nobody understands how to value derivatives. > > On Wed, Oct 1, 2008 at 12:23 PM, Sam <[EMAIL PROTECTED]> wrote: >> What caused the $1 trillion credit derivatives default? >> Bad mortgages. >> So what was your point? >> >> >> On Wed, Oct 1, 2008 at 10:21 AM, Maureen <[EMAIL PROTECTED]> wrote: >>> Credit derivatives are in the 50 Trillion range, not bad mortgages. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Adobe® ColdFusion® 8 software 8 is the most important and dramatic release to date Get the Free Trial http://ad.doubleclick.net/clk;207172674;29440083;f Archive: http://www.houseoffusion.com/groups/cf-community/message.cfm/messageid:271809 Subscription: http://www.houseoffusion.com/groups/cf-community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=11502.10531.5
