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Wednesday, November 30, 2022

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Modern Finance – Those Pesky Derivatives

Modern Finance – Those Pesky Derivatives

Courtesy of Howard Lindzon 

We are getting our first really nasty day of weather here in Northern Ireland.

It is pouring buckets of rain with 40 miles per hour winds as we head out to play Royal Portrush.

You can’t hide from the weather when you want to play golf.

In modern finance, you can’t hide from leverage and derivatives.

Matt Levine explains how modern finance and derivatives have worked their magic forcing margin calls at UK Pensions from rising rates and it is worth a read.

The gist…

‘If you have a pot of money that is immune to bank runs, over time, modern finance will find a way to make it vulnerable to bank runs.’

There are all types of modern finance vulnerabilities being exposed now with rising rates that people don’t know about yet.

Image by Rudy and Peter Skitterians from Pixabay 

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