Tag: Finanical Reform

Introduction To Weather Derivatives

by Felix Carabello, Associate Director, Environmental Products, Chicago Mercantile Exchange

Weather: Risky Business

It is estimated that nearly 20% of the U.S. economy is directly affected by the weather, and that the profitability and revenues of virtually every industry – agriculture, energy, entertainment, construction, travel and others – depend to a great extent on the vagaries of temperature. […]

In a 1998 testimony to Congress, former commerce secretary William Daley stated, “Weather is not just an environmental issue; it is a major economic factor. At least $1 trillion of our economy is weather-sensitive.”

[…]

If there were only some way, to “Hedge that Bet” — against the ever present risk of Foul Weather.

No Worries — Where there’s a Market Risk, there’s always a Wall Street Way!

How does your Obligation to make your Mortgage Payments, turn into some unseen Investor’s “Income Stream”?

Easy — thanks to Derivatives and CDO’s (Collateralized Debt Obligation).

For the mere Price of Admission, those unseen Investor’s get to divvy up your Mortgage Payments, among themselves — long as they “promise to pay off” that Debt, WHEN, for whatever reason, you are no longer able to make those Obligatory Payments …

Piece of Cake!

Geesh … WHAT could ever go wrong with this picture?

Dallas Fed chief calls for breakup of ‘too big to fail’ banks in New York speech

BRENDAN CASE, The Dallas Morning News – March 4, 2010

Federal Reserve Bank of Dallas President Richard Fisher traveled to New York to trumpet a message he’s told Texas audiences before: Banks that are too big to fail are too big to exist in the first place.

Speaking Wednesday at the Council on Foreign Relations, Fisher said big, systemically important banks should be dismantled before regulators have to deal with another crisis like the one that nearly brought down Wall Street and the rest of the U.S. financial system in late 2008.

“The dangers posed by too-big-to-fail banks are too great,” he said.

Fed Chairman Ben Bernanke and others have said Congress should pass a law giving regulators “resolution authority” to close down failing financial companies.

http://www.dallasnews.com/shar…

That is Good News, sort of.