

Derivatives Really Aren't Very Scary - hga
http://online.wsj.com/article/SB10001424052748704852004575258782019263898.html

======
hga
It's also worth pointing out that when all the institutions that had Lehman
Brother CDS exposure got together to settle it, after canceling out the huge
notational figure dropped to only $5.2 billion in real money changing hands.

ADDED: here's one item I found discussing the details of all this:
[http://www.glgroup.com/News/Lehman-CDS-
Settlement-%E2%80%93-...](http://www.glgroup.com/News/Lehman-CDS-
Settlement-%E2%80%93-The-Dog-that-Didnt-Bark--28832.html)

------
tjmaxal
This is anecdotal at best

~~~
hga
And your point is?

We're comparing confident "The Sky Is Falling!" predictions, which among other
things led to real legislation such as the Volker proposal or whatever, which
was discussed in a recent HN thread, with the actual reality of how
derivatives as used by people with a clue haven't resulted in the end of the
world.

With this sort of thing, you _can_ test propositions, but only anecdotally. We
don't have multiple Earths/economies where we can set one aside as a control
and play with the rules in the others.

In another comparison, which you'll find repeated in less dramatic form
elsewhere (e.g. the sewer mess in a Mississippi? county), the oh so wise
political class which so many insist must police this instruments of the devil
show they're not exactly fit for the task.

To tie that back together with the Volker proposal, which proposes to forbid
banks, companies that own banks, etc. from investing in/using/whatever these
and a variety of other "dangerous" instruments somehow made an exception for
those sold by Fannie Mae and Freddie Mac....

