Oh give me a break Geithner, you want what?
U.S. Treasury Secretary Timothy Geithner on Tuesday called on the International Monetary Fund to provide rigorous surveillance to spot new investment bubbles and keep country foreign exchange policies in line with goals to rebalance the global economy.
"The IMF will need to be a truth-teller," Geithner said in the remarks, which were to be delivered by Treasury Acting Assistant Secretary Mark Sobel.
"For the IMF, this means that rigorous surveillance must help us shed light on trends that could lead to the next unsustainable boom," Geithner said.
"Under the new G20 framework for strong, sustainable and balanced growth, the IMF must provide forward-looking analysis of whether the world’s major countries are implementing economic policies, including exchange rate policies, which are collectively consistent with G20 objectives."
I don’t say this often, but F**K you! You are such a j*****s!
Want me to refresh your memory (courtesy of Business Week 1997)
Welcome to the little-publicized but rapidly expanding new world of credit derivatives, the infant cousin of better-known and occasionally notorious financial derivatives. Besides credit-default swaps, a kind of guarantee that can be bought and sold, permutations include total-return swaps–which enable lenders to sell the cash stream of a loan but not the loan–and options on credit risk. Boosters say credit derivatives could alter for the better the credit-risk profiles of financial institutions and companies. By enabling lenders to strip loans, bonds, and other instruments into credit risks that can be privately traded in institutional markets, these contracts, they say, will promote portfolio diversification and reduce loan concentrations.
One reason credit derivatives had been somewhat slow to develop is the fear of repeating the disasters that have plagued the financial-derivatives business in recent years, such as 1995’s Bankers Trust/Procter & Gamble imbroglio. Indeed, while dealmakers and regulators alike are ebullient about the potential of credit derivatives for dispersing credit risk, they acknowledge that in the wrong hands, these instruments can–and most likely will–inflict heavy losses on some banks, companies, and investors. Christine M. Cumming, senior vice-president at the Federal Reserve Bank of New York, stresses that bank regulators view credit derivatives as a "positive development." But she concedes that the "potential for good also creates the potential for problems."
In the absence of a blowup, practitioners seem more focused on the good rather than the bad and the ugly.
This article was written in 1997, an entire decade before the blowup. Who viewed these derivatives as good things? Oh yeah, the bank regulators! Yes Tim, the same folks you worked with. The hazards of these instruments were suspected, but the regulators turned a blind eye. I am not blaming any politician here because the regulators could have done something. The reality is that people like you Tim were asleep at the wheel, and did not do your job. And the IMF is sure as heck not going to do their job either.
So stop grandstanding! Any recommendations that might result will be ignored by people like YOU.
BTW how does this article close?
For now, practitioners can only hope that when it comes to credit derivatives, Murphy’s Law doesn’t apply.
Oh yeah hope and the market, what can go wrong…