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Stiglitz doesn't want big banks trading derviatives..

Started by Riversider
almost 17 years ago
Posts: 13573
Member since: Apr 2009
Discussion about
http://www.bloomberg.com/apps/news?pid=20601085&sid=a65VXsI.90hs Oct. 12 (Bloomberg) -- Large banks should be banned from trading derivatives including credit default swaps, said Joseph Stiglitz, the Nobel prize-winning economist. The CDS positions held by the five largest banks posed “significant risk” to the financial system, Stiglitz said at a press conference in Brussels. Big banks should have extra restrictions placed on them, including a ban on derivative trading, because of the risk that they would need government money if they fail, he said in a speech today.
Response by Riversider
almost 17 years ago
Posts: 13573
Member since: Apr 2009

Interestingly Stiglitz talks about alpha & beta & leverage.
Applying these concepts to real estate and mortgages. The cabal that brought us low down payments and affordable mortgage products did two things: Increased risk(beta) but not the returns(alpha).

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