Soros says regulate

[marvenger]

http://www.project-syndicate.org/com...oros58/English

'Sophisticated' investors blew it, can't do whatever the hell they want anymore.

[Rajiv]

Re: Soros says regulate

From the article:

Derivatives can serve many useful purposes, but they also contain hidden dangers. For instance, they can pile up hidden imbalances in supply or demand, which may suddenly be revealed when a threshold is breached. This is true of so-called “knockout options,” used in currency hedging. It was also true of the portfolio insurance programs that caused the New York Stock Exchange’s Black Monday of October 1987. The subsequent introduction of circuit-breakers tacitly acknowledged that derivatives can cause disruptions, but the proper conclusions were not drawn.

Soros' article should be read together with Liu's - The Unlearned Lesson of the 1987 Crash