Marvin:
maybe they work for hedging purposes,
but they still represent a potential source
of catastrophic instability.
No! This was not my point. My was not that maybe they
work for hedging purposes. My point was that they may
work for hedging purposes but not always.
Size matters.
Also my
I said:
Marvin:
maybe they work for hedging purposes,
but they still represent a potential source
of catastrophic instability.
No! This was not my point.
By the way, it happens that I was the last product
manager of the Leland-Rubinstein portfolio insurance
program. It died in my hands
I didn't ask the question to be provocative. Someone raised it with me in a
discussion. Your answer seems to be maybe they work for hedging purposes,
but they still represent a potential source of catastrophic instability.
That's essentially what I replied, wondering whether I'd missed any
Frank Partnoy's book suggests that most derivatives exist in order to
get around financial regulations.
--
Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu
- Original Message -
From: Sabri Oncu [EMAIL PROTECTED]
To: [EMAIL PROTECTED]
Sent: Thursday, March 11, 2004 9:42 PM
Subject: Re: [PEN-L] An essay on economic basis of bourgeois risk and
gambling culture - parasitism as derivatives, options, swaps, hedge funds
etc.
Marvin Gandall:
Sabri: How would you answer the argument that most derivatives are used for
hedging operations and are therefore a source of stability for the system? I
agree with your point about the downside; while all markets are a gamble, a
wrong bet on highly leveraged derivatives -- as LTCM showed -- poses
Marvin:
Sabri: How would you answer the argument that most
derivatives are used for hedging operations and are
therefore a source of stability for the system?
Dear Marvin,
I was tempted to open up with the following:
Are they? I did not know this!
But if I do that you may get the
The derivatives market has expanded enormously in recent years, with
investment banks selling billions of dollars worth of contracts to
capitalists as a way to minimise loss of their capital through unforeseen
market fluctuations that could possibly lower its value (what Marx called
Hungarian, but a good essay nonetheless. :)
- Original Message -
From: Jurriaan Bendien [EMAIL PROTECTED]
To: [EMAIL PROTECTED]
Sent: Thursday, March 11, 2004 6:31 PM
Subject: [PEN-L] An essay on economic basis of bourgeois risk and
gambling culture - parasitism as derivatives, options,
Marvin Gandall:
Hungarian, but a good essay nonetheless. :)
No! It is not a good essay.
It is a wonderful demonstration of lack of
understanding of derivatives, as the following
statement of its author demonstrates:
the rate of profit on capital can be significantly
higher, and the risk
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