Comments on: Derivatives Explained http://www.traditionsofmen.org/2009/04/05/derivatives-explained/ Economic and political challenges from a Christian worldview. Mon, 26 Sep 2011 22:48:32 -0400 hourly 1 http://wordpress.org/?v=3.1 By: Doug Tjaden http://www.traditionsofmen.org/2009/04/05/derivatives-explained/comment-page-1/#comment-1206 Doug Tjaden Sat, 11 Apr 2009 20:39:01 +0000 http://www.free4him.org/dougblog/?p=449#comment-1206 Dan, I'll have to disagree with some of your comments. The story was meant to be a humorous way to help people understand how a group of toxic assets (the Fed and Treasury's description, not mine) made their way into the economy in such numbers as to cause our global meltdown. As far as it being ridiculous to portray derivative dealers as exploitative sellers of alcoholic to alcoholics, I would say that is probably quite an accurate picture for many of them. These "legitimate" products unfortunately in many cases were not used properly, and just like alcohol in the hands of the wrong people, have had equally as devastating results. Regarding the ratings companies... We'll see just how fraudulent these ratings were in a few years - when some of this makes its way through litigation. I will say without hesitation that before this is over, IMHO there will be high level people in the ratings agencies who will resign over the scandals that will be exposed, and some may even find themselves in jail. Dan,

I'll have to disagree with some of your comments. The story was meant to be a humorous way to help people understand how a group of toxic assets (the Fed and Treasury's description, not mine) made their way into the economy in such numbers as to cause our global meltdown.

As far as it being ridiculous to portray derivative dealers as exploitative sellers of alcoholic to alcoholics, I would say that is probably quite an accurate picture for many of them. These "legitimate" products unfortunately in many cases were not used properly, and just like alcohol in the hands of the wrong people, have had equally as devastating results.

Regarding the ratings companies… We'll see just how fraudulent these ratings were in a few years – when some of this makes its way through litigation. I will say without hesitation that before this is over, IMHO there will be high level people in the ratings agencies who will resign over the scandals that will be exposed, and some may even find themselves in jail.

]]> By: Doug Tjaden http://www.traditionsofmen.org/2009/04/05/derivatives-explained/comment-page-1/#comment-1210 Doug Tjaden Tue, 07 Apr 2009 14:34:34 +0000 http://www.free4him.org/dougblog/?p=449#comment-1210 Here is a better explanation of what happened, including my assertion that the ratings agencies will soon be forced to face the music. <a href="http://www.pbs.org/moyers/journal/04032009/watch.html" target="_blank">http://www.pbs.org/moyers/journal/04032009/watch....</a> Here is a better explanation of what happened, including my assertion that the ratings agencies will soon be forced to face the music.

http://www.pbs.org/moyers/journal/04032009/watch….

]]> By: Chandler http://www.traditionsofmen.org/2009/04/05/derivatives-explained/comment-page-1/#comment-1205 Chandler Mon, 06 Apr 2009 19:16:36 +0000 http://www.free4him.org/dougblog/?p=449#comment-1205 Wow... great explanation. Thanks for that Wow… great explanation. Thanks for that

]]> By: Dan http://www.traditionsofmen.org/2009/04/05/derivatives-explained/comment-page-1/#comment-1204 Dan Mon, 06 Apr 2009 18:13:18 +0000 http://www.free4him.org/dougblog/?p=449#comment-1204 The story is "not completely accurate", you say? That description is so full of innuendo, oversimplification, and omission that it is more harmful than helpful. Just a couple of examples -- first, portraying derivatives dealers as exploitative sellers of alcohol to alcoholics is ridiculous. Derivatives are a perfectly legitimate product and, used properly, provide benefits to both buyer and seller. Second, saying that these securities were rated AAA is ridiculous exaggeration as only the top tranche was rated AAA. Obviously the ratings were wrong, but it was not, as portrayed in your story, an out and out fraudulent rating of worthless securities. Third, the story fails to acknowledge the significant culpability of both legislators and consumers in the current meltdown. It's great to help people understand the nature of our current problems, but this story unfairly demonizes derivatives dealers and ratings agencies. They are not without fault, but this analogy is irresponsibly misleading. The story is "not completely accurate", you say? That description is so full of innuendo, oversimplification, and omission that it is more harmful than helpful. Just a couple of examples — first, portraying derivatives dealers as exploitative sellers of alcohol to alcoholics is ridiculous. Derivatives are a perfectly legitimate product and, used properly, provide benefits to both buyer and seller. Second, saying that these securities were rated AAA is ridiculous exaggeration as only the top tranche was rated AAA. Obviously the ratings were wrong, but it was not, as portrayed in your story, an out and out fraudulent rating of worthless securities. Third, the story fails to acknowledge the significant culpability of both legislators and consumers in the current meltdown.

It's great to help people understand the nature of our current problems, but this story unfairly demonizes derivatives dealers and ratings agencies. They are not without fault, but this analogy is irresponsibly misleading.

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