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DERIVATIVES 5/26/2012 4:56:37 AM
According to Webster’s Third International Unabridged Dictionary (the BIG one that weighs 147 lbs. and lives alone on its own wooden pedestal in the alcove near the bookcases, just outside my office), a ‘derivative’ is a noun from the Latin ‘derivatus’ that means 1: formed by derivation 2: arising from, formed or made up of elements or qualities derived from something else (as from an ultimate source). It is also an adjective, etc.
The entry to quite long, but this, as I suspected, is the basic etymology of the word.
Today’s economy demands that all Americans become accustomed to the word and fully understand its basic concepts as applied to everyday life. A grasp of derivatives is important in maintaining something as simple as a household budget. It also helps if you have certain nationalist responsibilities, too.
For example, being able to distinguish a derivative from an ordinary ‘swap’ will afford the average American an ability to circumvent disaster when faced with exorbitant interest rates, such as are prevalent in foreign countries, thanks mainly to Wall Street and American banks.
Had the Greek, Italian and French economists seen this, they might have avoided the debacle in which they find themselves (albeit quite by accident or stupidity). There is, obviously, a distinction to be made between ‘swaps’ and derivatives. Or are they one and the same? If you aren’t sure, ask someone from J.P. Morgan.
Perhaps we were too hasty in demeaning the 99%ers and their Tea Party instigators. They may be on to something, even if their modus operandi seems a bit outlandish. It’s difficult for clear-headed conservative liberals to discern what these renegades hate more: the pigs or their farmers. I now think they might have understood the true essence of derivatives better than we gave them credit for.
If only the Europeans — mainly the Germans and English — had taken the machinations of Morgan Stanley, UBS, and Credit Suisse more seriously!
When you come right down to it, the difference between swaps and derivatives (if there is any) is all they needed to know. The U.S. economy would never have suffered so blatantly if the Europeans could have been responsible for a mere 3% interest on their loans, rather the 16, 51 or 82%.
Of course, there were the obligatory payoffs to certain CEOs and Wall Street traders to consider. Lord knows, there are no way incomes and bonuses of several millions of dollars could be sustained if transparency became the order of the day!
Speaking of order, how much did the traders and salespeople at CitiCorp, Bank of America, Goldman Sachs and AIG know? Not much, I’ll wager! The number of derivatives and swaps being offered to bug-eyed investors with flaming holes in their pockets is a bigger secret than the ingredients of Coca-Cola!
Is Barack Obama or Timothy Geithner to blame? Hardly. Geithner may be a terrible public speaker and as dull and seemingly inept on-camera a personality as any champion loser, but there is no human on this planet with a better grasp of true fiduciary ins-and-outs than Tim Geithner. And no matter what political party you favor, you can take that to the bank!
And far as Barack Obama goes, I can think of no better leader, past or present (with the possible exception of FDR), we could possibly have working for us than a man who can look other world powers in the eye and say flat out, “This is the sort of mess we did not create — it was already on the books when we showed up — but we can, and will, do something about it. Just this once. After that, you’re on your own.”
It, of course, can never be allowed to happen again, no matter who’s sorry ass is in the White House. And it won’t. We, as a people, are up to here with unemployment, mortgage debt for houses we had no business buying (and for which we should never have gotten the money loaned to us in the first place), student loan borrowing, bank and manufacturing bail-outs, insane government spending thanks to a ‘do-nothing’ Congress, and miniscule interest rates that are going to cause out-of-control inflation if they do not soon go up.
One scribe (Jamie Dupree?) may have hit the nail square on the head when he suggested, tongue-in-cheek perhaps, that Wall Street should hire everyone who has at least $25,000 in student loans they cannot pay back. “Hell’s bells, they’re all college graduates who can’t find a job!”
I bet they’d jump at the chance to make 12 million a year and, like all their bosses, never even have to learn to spell derivatives!
