If these companies know how to use derivatives properly, then why did they hedge to 40-1 or greater??? This is proof that they don't really know what they're doing. Besides that, Warren Buffett said long before the crisis that investors need to stay away from derivatives because they would come to be known as the greatest destroyers of wealth in modern history. He was spot on.
@Eisen89 Private investors probably should stay away form derivatives because they are dangerous if you don't know what you are doing. But don't throw the baby out with the bath water. Derivatives are an important tool in institutional investing to reduce risk when paired with assets.
I do agree with you to some extent, but thus far, we have seen that they have been abused. If we decide to keep derivatives, they have to be regulated greatly so that they are not abused like this again.
@Eisen89 I'm not sure about "greatly", but I agree that we need some regulation in this regard. We need to ensure that the liability of holding some of these (epecially the credit default swaps) are known and that banks must maintain a solvency. It is important that the banks be capable of failing without taking down the economy. Banks failing *should* be a good thng; not destructive.
Scott Garrett is my congressman. He's a knuckle dragging, ultra-conservative zealot who is driven by ideology, not reason.He should move to Oklahoma where his brand of foolishness will be better appreciated
But he's right. Derivatives, when used correctly, are used to *reduce* risk, not increase it. Removing derivatives will increase risk. I know that liberals are driven by feelings and intentions but conservatives are ruled by facts and experience.
they gonna get to the poll barn bill yet
eaglemike1515 1 year ago
If these companies know how to use derivatives properly, then why did they hedge to 40-1 or greater??? This is proof that they don't really know what they're doing. Besides that, Warren Buffett said long before the crisis that investors need to stay away from derivatives because they would come to be known as the greatest destroyers of wealth in modern history. He was spot on.
Eisen89 1 year ago
@Eisen89 Private investors probably should stay away form derivatives because they are dangerous if you don't know what you are doing. But don't throw the baby out with the bath water. Derivatives are an important tool in institutional investing to reduce risk when paired with assets.
RobertGary1 1 year ago
I do agree with you to some extent, but thus far, we have seen that they have been abused. If we decide to keep derivatives, they have to be regulated greatly so that they are not abused like this again.
Eisen89 1 year ago
@Eisen89 I'm not sure about "greatly", but I agree that we need some regulation in this regard. We need to ensure that the liability of holding some of these (epecially the credit default swaps) are known and that banks must maintain a solvency. It is important that the banks be capable of failing without taking down the economy. Banks failing *should* be a good thng; not destructive.
RobertGary1 1 year ago
Scott Garrett is my congressman. He's a knuckle dragging, ultra-conservative zealot who is driven by ideology, not reason.He should move to Oklahoma where his brand of foolishness will be better appreciated
analogcorner 2 years ago
But he's right. Derivatives, when used correctly, are used to *reduce* risk, not increase it. Removing derivatives will increase risk. I know that liberals are driven by feelings and intentions but conservatives are ruled by facts and experience.
RobertGary1 2 years ago
I think you put the word "conservatives" where the word "liberals" should be and vice-versa.
Eisen89 1 year ago