Joe Rotger
Mar 24, 2010
It's quite obvious that all transactions have to be cleared at some exchange --accountability is vital. We don't want the shadowier markets to explode in our faces.
We also don't want the managers and traders to have their objectives misaligned with the institutions they represent. Most of these guys knew several years in advance that their practices would eventually bankrupt their companies, but hey, they were making $$$$$ every year no matter what...
"Fortunately" human nature is the way it is, the mice will eventually find a way to get to the mousetrap's cheese... and we will be forced once again to put the cheese back into a better mouse trap.
So what do we do?
We take insurance, the actuarial tables can easily be prepared --there is a history track. From now on, we collect a tiny premium on every stock, bond and future transaction to cover the insurance on the cheese for that dreaded day the mice get to it again.
Ken Jones
Mar 11, 2010
The theory of portfolio networks, and the theory of portfolio networks under uncertainty is highly developed and is presented in the book Portfolio Management: New Models for Successful Investment Decisions, by C. Kenneth Jones. This theory, however, has been largely ignored by financial academics.
finance guy
Mar 10, 2010
This is an interesting idea. While such an effort would certainly be a boon to the IT departments of the large financial institutions, it would reduce the margin of profit for OTC contracts and hurt banks' profit margin. One has to understand that banks thrive from lack of transparency. So banks will be forced to "innovate" and create new products outside the scope of such a database to generate revenue. Thus, it is not clear that the problem of systemic risk will be addressed long term.
reader
Mar 04, 2010
the idea that we needed a really large database to see the current problem coming is laughable. there were plenty of signs there, and plenty of reasons for the players in charge to ignore them. the bet was that the government would bail them out if anything went wrong, and it paid out! the rest is history.
mauricejohnson3@aol.com
Mar 03, 2010
Nice idea - not feasible - for negotiable securities the is TRACE - for FX there are other sytems - for bank loans and derivatives ....there is nil.
anon
Mar 03, 2010
Good article, but please clarify one thing:
The first sentence clearly implies that it IS possible to monitor trades, and yet the rest of the article is all about how such a 'Network Map' monitoring tool does not exist.
I just dont follow. Might you mean that such a network map is needed, but only for OTC trades?
