Retire Soon
Full time employment: Posting here.
- Joined
- Nov 23, 2005
- Messages
- 655
George Soros once said that he avoided using derivatives, "because we really don't understand how they work." Warren Buffets believed that derivatives were, "financial weapons of mass destruction." Felix Rohatyn, who been given credit for saving New York from financial ruin in the 70's described these financial contracts as, "hydrogen bombs."
On the other hand, Alan Greenspan had a completely opposing view and fought fiercely for continued use of derivatives. In 1997, The Commodity Futures Trading Commission began looking into the regulation of derivavtives and believed that this type of opaque trading could seriously threaten our economy unless their were both greater disclosure of trades and reserves.
The views of the Futures Trading Commission were sharply contested by Greenspan and then Treasury Secretary, Robert Rubin. These two individuals along with Arthur Levitt convinced congress to avoid listening to the views of this commission until, "other regulators developed their own recommendations."
Shortly thereafter, hedge fund, Long Term Capital Management nearly collapsed. Congress then stripped the Futures Trading Commission's regulatory authority for six months. In 1999, Greenspan and Rubin recommended to congress that the CFTC be permanently stripped of its authority to regulate derivatives.
As the global economy increasingly becomes worse, because of the housing crisis and lack of credit availability, derivative now magnify the problem. The derivatives market is now an astounding $531 trillion, up from $106 trillion in 2002.
According to an article in the New York Times, today's financial crisis could have been, "muted or prevented" if Greenspan had acted differently during his tenure as Federal Reserve Chairman from 1987 to 2006. It's no wonder that Mr. Greenspan has seldom accepted invitations for speaking engagements over the past several months.
http://www.nytimes.com/2008/10/09/b... Look at Greenspans Legacy&st=cse&oref=slogin
On the other hand, Alan Greenspan had a completely opposing view and fought fiercely for continued use of derivatives. In 1997, The Commodity Futures Trading Commission began looking into the regulation of derivavtives and believed that this type of opaque trading could seriously threaten our economy unless their were both greater disclosure of trades and reserves.
The views of the Futures Trading Commission were sharply contested by Greenspan and then Treasury Secretary, Robert Rubin. These two individuals along with Arthur Levitt convinced congress to avoid listening to the views of this commission until, "other regulators developed their own recommendations."
Shortly thereafter, hedge fund, Long Term Capital Management nearly collapsed. Congress then stripped the Futures Trading Commission's regulatory authority for six months. In 1999, Greenspan and Rubin recommended to congress that the CFTC be permanently stripped of its authority to regulate derivatives.
As the global economy increasingly becomes worse, because of the housing crisis and lack of credit availability, derivative now magnify the problem. The derivatives market is now an astounding $531 trillion, up from $106 trillion in 2002.
According to an article in the New York Times, today's financial crisis could have been, "muted or prevented" if Greenspan had acted differently during his tenure as Federal Reserve Chairman from 1987 to 2006. It's no wonder that Mr. Greenspan has seldom accepted invitations for speaking engagements over the past several months.
http://www.nytimes.com/2008/10/09/b... Look at Greenspans Legacy&st=cse&oref=slogin