09/23/2014 - Another Unintended Consequence Of Financial Repression: Banks Taking Highers Risks On Derivatives
Bloomberg article highlights how reckless derivative speculation is in big banks which are being supported by the government .. Danielle Park comments on this article: “When we don’t learn, we are doomed to keep suffering…the investment banks are still backed by the public purse today and are now bigger and bolder in concentrated risk bets than ever before.” ..Bloomberg notes that Citigroup now has the largest stockpile of interest rate swap derivatives – a type of derivative that can swing in value when central banks raise rates: “More than 92% of the bank’s derivatives don’t trade on exchanges, making it harder for regulators to spot dangers in the market .. financial repression of interest rates is making it harder to profit from interest rate swap derivatives: “Reduced volatility associated with Fedpolicies to suppress interest rates is making it harder to profit from swaps.”
