Dear Penlrs, As we watch the Amazing Market Rollercoaster, something else to keep in mind: what is all this--markets crashing, currencies roiling, etc.--going to do to the dervatives market? And what are the D's going to do to corporate america? I've been tracking the fights w/ the SEC and FASB over the new derivatives accounting/disclosure standards, and the impression I've gotten is that a hell of a lot of companies have a ton of derivatives that may blow up in their faces, and that not a lot of their CEOs may realize it (there was a wonderful piece in Institutional Investor describing the SEC's new rules on disclosing a company's derivatives position where, in passing, the Investor noted that the rules shouldn't be such a big deal because any sane company should already have this info at their fingertips, but few do). This won't show up for a bit, but when it does, it should be very educational. Speaking of education, if you're interested in getting a better grip on the bizarre world of derivatives, you should definitely check out Frank Partnoy's F.I.A.S.C.O., which just came out. It isn't as well written as Michael Lewis' Liar's Poker, but it's much, much more horrifying. It tells the story of how Morgan Stanley got into the business of aggressively selling various forms of toxic waste. Their attitude towards their clients was best summed up by the time when Partnoy's boss put a picture on his desk of cute little bunnies from a sporting magazine, the message being that if he wanted to succeed in this business, he needed to learn how to kill cute bunnies, 'cause that's what they were doing to their clients. Incidentally, F.I.A.S.C.O refers to an annual skeet-shooting event they had, as part of their overall effort to pump up the level of blood-lust. Anders Schneiderman Financial Markets Center ----------------------------------------------------------- Opinions here do not necessarily represent the views of the Financial Markets Center
