Most Popular Choices
Share on Facebook 10 Printer Friendly Page More Sharing
OpEdNews Op Eds   

Taking the Trash to Task

By       (Page 12 of 19 pages) Become a premium member to see this article and all articles as one long page.   No comments
Follow Me on Twitter     Message Michael Bonanno
Become a Fan
  (7 fans)

""the parties to derivatives" have enormous incentives to cheat in accounting for them. "often there is no real market". This substitution can bring on large-scale mischief. In extreme cases, mark-to-model degenerates into what I would call mark-to-myth.

"Almost invariably, they (derivatives) have favored either the trader who was eyeing a multi-million dollar bonus or the CEO who wanted to report impressive "earnings (or both). The bonuses were paid, and the CEO profited from his options. Only much later did shareholders learn that the reported earnings were a sham.

"Another problem about derivatives is that they can exacerbate trouble that a corporation has run into for completely unrelated reasons. "It all becomes a spiral that can lead to a corporate meltdown.

"Derivatives also create a daisy-chain risk that is akin to the risk run by insurers or reinsurers that lay off much of their business with others. In both cases, huge receivables from many counter-parties tend to build up over time. A participant may see himself as prudent, believing his large credit exposures to be diversified and therefore not dangerous. However under certain circumstances, an exogenous event that causes the receivable from Company A to go bad will also affect those from Companies B through Z.

Next Page  1  |  2  |  3  |  4  |  5  |  6  |  7  |  8  |  9  |  10  |  11  |  12  |  13  |  14  |  15  |  16  |  17  |  18  |  19

(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).

Rate It | View Ratings

Michael Bonanno Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

Michael Bonanno is an associate editor for OpEdNews.

He is also a published poet, essayist and musician who lives in the San Francisco Bay Area.

Bonanno is a political progressive, not a Democratic Party apologist. He believes it's (more...)
 

Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Follow Me on Twitter     Writers Guidelines

 
Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

STAY IN THE KNOW
If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
Name
Email
   (Opens new browser window)
 

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Teabaggers; Children of the Sixties?

It's OK to say "Merry Christmas"

Is The Constitution Really That Unfair?

Will "Americans Elect" Their President in 2012?

Why Anarchism, Communism and Libertarianism are Pipe Dreams

LA Socialist Party Local Holds Organizing Meeting (Discussion with Mimi Soltysik, Local Chair)

To View Comments or Join the Conversation:

Tell A Friend