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Has it? In a way that means banks can't earn lots of money any more? I don't think so. Banks will definitely make less money over the next few years and they'll cut their cloth accordingly. But they'll be back. It's not like all the CEOs are sitting around in dazed despair, weeping and wailing...

I just don't see it having a long-term impact. The kind of products that banks sell are going to be simpler for quite some time, but the markets themselves - and the trading strategies that banks employ - aren't going to suddenly become navigable via simple arithmetic. I don't buy Taleb's...

They haven't missed the boat. In fact, if they've just done their A-levels, they've probably timed it perfectly! There's going to be a short-term drop-off in demand for technical skills in finance, but only in a few areas - and only temporarily. I wouldn't trust anyone who argues that...

Right - I'm with you. It does seem counter-intuitive - but even synthetic shorts are a form of insurance. It's just that the rapid-fire trading of those positions makes it seem un-insurance like. For example, if you sell protection on a credit index like the ABX - a naked, synthetic short...

Whoops. Sorry - didn't mean to go off on one. In what way do you think CDS are dangerous, then? A lot of them really are hedges. If dealers run balanced books, then pretty much half their default swaps will be offsetting other positions. Yep. In fact, Eurex and the CME both launched...

There's nothing intrinsically dangerous about CDS - and Grievous is right, dealers don't use their CDS books to build up big one-way exposures. If they sell protection on a name, they'll turn round and buy protection later - so although the amount of protection being traded on an underlying name...

No worries. I hope one of them bears fruit. Good stuff. And I know exactly where you're coming from. My girlfriend and I moved here from London in 2005 basically on a whim and with a vague idea that we'd stay here for a couple of years and then move back. Now? No way. We're both really happy...

Howdy, Baboon. What brings you to Berlin? You shouldn't have too much trouble finding a short-let room / flat. A few friends of ours have moved over here for a spell at various times and only ended up on our sofa for a few days. They have this weird system over here in which one tenant in a...

I agree. I don't think it's anything fancy. Not to drop names or nuffin' but I spoke to Taleb about his trading strategy a few years ago - IIRC, he said that the toughest thing about it is that it runs counter to most traders' natural instincts. The options he buys are deep out-of-the-money, so...

Not me! I'm all at sea when it comes to tumbling stocks, currency swings and national economies. All I'd say is that it's quite refreshing to have this looking a bit more like a common-or-garden economic crash for a while rather than the death of modern finance.

It's going to be a headache for me. I won't miss the dire discussion forum in any way, but it was an excellent resource for event listings. Really comprehensive. I'm not plugged into the scene in any way, so I've got no idea where to go now to keep tabs on what's happening near me.

Sorry. Most of my info is from bank research, the finance press and conversations, so I'm not going to be much help here. The one thing that comes to mind is a short article which appeared in the BofE's Financial Stability Report in April. You can find it here...

I agree with that. Changing the accounting rules now (by shifting to some kind of fundamental measure) will result in a big bounce in the value of banks' illiquid assets - which most people would instinctively dismiss as accounting manipulation. Rather than changing the way people report value...

No-one major. But IKB's bigger than Bradford and Bingley / Northern Rock - they should be on there. And there was a biggish US regional bank who went down earlier this year, too. Can't remember the name.

It certainly does - but I'm not suggesting that they always trade contrarian, just that when things go wrong, it's hedge funds and PE funds who re-enter the fray earliest. They're the ones who provide the floor. Lone Star bought up a portfolio from Merrill a month or so ago, and Blackstone said...

Activist equity hedge funds would argue that they do a good job of forcing lazy, incumbent management to think more carefully about shareholder value rather than their own interests. I think that's true in some cases. Hedge funds which look for arbitrage strategies would argue that they make...

I know what you mean. It's stupid. On the one hand, you can always argue that the value of these companies isn't bouncing around crazily - what's changing is investors' perception of the net present value of the company's assets and future earnings, which can obviously be a much more volatile...

I dunno. But I'd guess so. In fact, there are any number of ways to hedge a long position on a stock - you could, for example, buy a default swap on the same name. Because credit spreads and stock prices are negatively correlated, your swap would gain in value as the stock lost value. It...

The alternative to mark-to-market accounting for derivatives and structured products is generally reckoned to be the system it replaced - historical cost. Critics of the current system argue that it exacerbates illiquidity by forcing banks and other investors to report valuation changes as...

Well, they do have a long track record of doing exactly that. I may be mis-remembering, but I think it's a relatively recent development that saw the investment banks rely on trading businesses for such a big chunk of their profits. As I recall, after the losses they suffered in 1998, they...