The Fed on Sunday announced several initiatives to provide additional support to financial markets

[Supercilious]

Re: The Fed on Sunday announced several initiatives to provide additional support to financial marke

I'd say derivatives have some role in diversifying risks, but their primary role is for banks to extract more fees from their customers....massive market!

The main role of derivatives is to misrepresent risk. By hiding the real risk they provide an image of safe and very profitable investment instruments.

Remember the CDO's? Auction rate securities? Why did the investors buy CDO's , ARS and ABCP and all those others three or four letter words? Because they were misled by mark-to-model smoke and mirrors risk assessment to believe those were high return, higly liquid and very low risk investment instruments.

Guess what? The reality changed the risk/award ballance from mark-to-model to mark-to-market and now we see their true mark-to-Lehman value.


There is no free lunch. ;)

[don]

Re: The Fed on Sunday announced several initiatives to provide additional support to financial marke

The main role of derivatives is to misrepresent risk. By hiding the real risk they provide an image of safe and very profitable investment instruments.

Remember the CDO's? Auction rate securities? Why did the investors buy CDO's , ARS and ABCP and all those others three or four letter words? Because they were misled by mark-to-model smoke and mirrors risk assessment to believe those were high return, higly liquid and very low risk investment instruments.

Guess what? The reality changed the risk/award ballance from mark-to-model to mark-to-market and now we see their true mark-to-Lehman value.


There is no free lunch. ;)

Free lunch is being provided at the Fed.

By invitation only.

[Slimprofits]

Re: The Fed on Sunday announced several initiatives to provide additional support to financial marke

Does anybody know what exactly is an *interim*final*rule*???

Hey finally I can answer one of your questions!

This is a function of the U.S. code rule making process. The interim final rule is to be published in the Federal Register and opened up to public comments. The comments are sometimes interesting to read....

Look here: What is a Rulemaking?

Rulemaking is the name given to the process followed by Federal Departments and Agencies to formulate, amend, or repeal a regulation. A Federal regulation is generally an authoritative requirement issued by a Federal Department and Agency that implements a statute and has the force of law. The rulemaking process generally consists of a proposed rule stage and a final rule stage. For most categories of rulemaking, the Department or Agency provides notice of a proposed regulation and any person or organization may review this document and submit comments on it in writing. The period during which public comments are accepted varies, but is usually 30, 60, or 90 days.

As part of the rulemaking process, the Department or Agency is required to consider the public comments received on the proposed regulation. When the Department or Agency publishes the text of the final regulation in the Federal Register, it generally incorporates a response to the significant issues raised by those who submitted comments and discusses any changes made to the regulation as a result.

[GRG55]

Re: The Fed on Sunday announced several initiatives to provide additional support to financial marke

Hey finally I can answer one of your questions!

This is a function of the U.S. code rule making process. The interim final rule is to be published in the Federal Register and opened up to public comments. The comments are sometimes interesting to read....

Look here: What is a Rulemaking?

Many thanks for digging this up and taking the time to post it. I still can't stop chuckling over something called "interim final" though....

[Slimprofits]

Re: The Fed on Sunday announced several initiatives to provide additional support to financial marke

Many thanks for digging this up and taking the time to post it. I still can't stop chuckling over something called "interim final" though....

No problem, I used to read the Federal Register and the Congressional Daily Digest on a daily basis, but it after a while it was taking a toll on my overall sanity.

The comment periods are a joke. They never, ever, ever, ever, modify the rules based on the public comments. It is the illusion of democracy or something like that.