Waiting for the big Kahuna Message Board

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Strategies & Market Trends : Waiting for the big Kahuna

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To: Mike M2 who wrote (17039)	4/21/1998 11:29:00 PM
From: Oeconomicus	Read Replies (1) of 94695

w.e.m., I'm not arguing that there is no exposure to derivatives portfolios in US banks, but focusing on the volume of derivatives business rather than looking at the real risks, or for evidence of unbalanced portfolios or sloppy credit work on the counterparties seems rather like sensationalism. Big numbers make nice headlines. I don't know the details of the Korea losses for JPM, but I'd like to if you have a link (couldn't find anything in JPM news, but do recall seeing something about this a few days ago). FWIW, I think the risk of derivatives comes when corporate managers start thinking they are clever and make big bets on interest rates or currencies rather than simply using derivatives to hedge or to squeeze a few basis point off borrowing costs through arbitrage opportunities. I think it was P&G that did that a few years ago and then tried to sue Banker's Trust when they lost their bet. Regards, Bob

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