Derivatives the Wild Beast of Finance

This new paperback edition of the successful 1998 cloth edition proves the soundness of many of Dr. Steinherr's earlier predictions as well as his alternative view of the role of derivatives in the world economy. Often regarded as the villain behind such recent financial disasters at Barings, Orange County, and the ERM crisis, derivatives, Steinherr argues, are just the opposite: financial instruments that ensure risk management in global markets, safeguarding against financial collapse and disaster.

Zusatztext "This book is a stimulating read with an excellent overview of risk in banking. It can be recommended to anyone who is interested in banking! derivatives and the regulation of the financial sector."-- Times Higher Educational Supplement! 17th November 2000 Informationen zum Autor Alfred Steinherr is General Manager at the European Investment Bank in Luxembourg and Rector of the Free University of Bolzano in Italy. He was responsible for the development of the EIB's risk-management and performance systems and for the design of risk hedging. Klappentext In den letzten 20 Jahren ist der Derivatehandel regelrecht explodiert. Die Struktur dieser Finanzprodukte wird jedoch zunehmend komplexer; die Beträge werden immer höher. Derivate wurden häufig als die großen Übeltäter identifiziert, die für viele der wohl bekanntesten Finanzkatastrophen, einschließlich der Barings Bank- und ERM Krise, verantwortlich waren. Dies ist die neue, komplett überarbeitete und aktualisierte Broschurausgabe von "Derivatives: The Wild Beast of Finance". Der Inhalt wurde komprimiert und um einige der komplexeren Themen gekürzt. Dadurch wurde diese Ausgabe für Anleger und Finanzinteressierte verständlicher. Steinherr vertritt hier die Ansicht, daß Derivate - wenn man umsichtig vorgeht - ein wirksames und durchaus akzeptables Anlagemittel sind. Darüber hinaus sind sie ideal geeignet, um effektives Risikomanagement in globalen Märkten zu gewährleisten und mögliche Finanzkatastrophen einzudämmen. Zusammenfassung Since the 1980s there has been an explosion in derivatives trading. Derivatives have often been seen as the villain, responsible for some of the most newsworthy financial disasters, including Barings Bank. This text offers a view that derivatives are an effective and acceptable investment medium. Inhaltsverzeichnis Preface to the Revised Paperback Edition Introduction Part I A Look Back 1 Evolution of Finance Venice, April 1470 1 The functions of finance 2 The first step towards managing financial risk: diversification and collateral 3 The second step towards managing financial risk: limited liability, bankruptcy laws, seniority rules, balance-sheet structure 4 The third step towards managing financial risk: creating tradable instruments and liquidity in organised markets 5 The final step towards managing financial risk: derivatives and financial engineering 6 Could the acceleration in financial innovation since 1970 have been predicted? 7 Conclusion Notes 2 The Americanisation of Global Finance Minnesota Banc Corporation 1 The emergence of the American model of finance 2 The crowning achievement: risk-management finance 3 Maintaining market liquidity: the sine qua non of the "American model" 4 Global finance: the result of exporting the "American model" 5 Conclusion Notes 3 Dramatic Events How George Soros sees it 1 The EMS crisis of 1992-93 2 Metallgesellschaft: in the red or in the black? 3 Barings: victim of high-leveraged speculation and loose controls 4 Bankers Trust: caveat emptor 5 David Askin: the fallen star of the mortgage-backed securities sky 6 Instability in emerging markets: Mexican tequila 7 Hedge funds and the collapse of LTCM 8 Conclusion Notes Part II Derivatives and Their Markets 4 The Revolution in Risk Management Farming for the future 1 What can derivatives achieve? 2 Price discovery and volatility 3 Is risk management a fundamental corporate objective? 4 Risk management: science or fad? 5 Risk management: some examples 6 Conclusion Notes 5 Mutualisation of Risk on Exchanges Chicago'...

Auteur

Alfred Steinherr is General Manager at the European Investment Bank in Luxembourg and Rector of the Free University of Bolzano in Italy. He was responsible for the development of the EIB's risk-management and performance systems and for the design of risk hedging.

Texte du rabat

In den letzten 20 Jahren ist der Derivatehandel regelrecht explodiert. Die Struktur dieser Finanzprodukte wird jedoch zunehmend komplexer; die Beträge werden immer höher. Derivate wurden häufig als die großen Übeltäter identifiziert, die für viele der wohl bekanntesten Finanzkatastrophen, einschließlich der Barings Bank- und ERM Krise, verantwortlich waren. Dies ist die neue, komplett überarbeitete und aktualisierte Broschurausgabe von "Derivatives: The Wild Beast of Finance". Der Inhalt wurde komprimiert und um einige der komplexeren Themen gekürzt. Dadurch wurde diese Ausgabe für Anleger und Finanzinteressierte verständlicher. Steinherr vertritt hier die Ansicht, daß Derivate - wenn man umsichtig vorgeht - ein wirksames und durchaus akzeptables Anlagemittel sind. Darüber hinaus sind sie ideal geeignet, um effektives Risikomanagement in globalen Märkten zu gewährleisten und mögliche Finanzkatastrophen einzudämmen.

Résumé
Since the 1980s there has been an explosion in derivatives trading. Derivatives have often been seen as the villain, responsible for some of the most newsworthy financial disasters, including Barings Bank. This text offers a view that derivatives are an effective and acceptable investment medium.

Contenu

Preface to the Revised Paperback Edition

Introduction

Part I A Look Back

1 Evolution of Finance

Venice, April 1470

1 The functions of finance

2 The first step towards managing financial risk: diversification and collateral

3 The second step towards managing financial risk: limited liability, bankruptcy laws, seniority rules, balance-sheet structure

4 The third step towards managing financial risk: creating tradable instruments and liquidity in organised markets

5 The final step towards managing financial risk: derivatives and financial engineering

6 Could the acceleration in financial innovation since 1970 have been predicted?

7 Conclusion

Notes

2 The Americanisation of Global Finance

Minnesota Banc Corporation

1 The emergence of the American model of finance

2 The crowning achievement: risk-management finance

3 Maintaining market liquidity: the sine qua non of the "American model"

4 Global finance: the result of exporting the "American model"

5 Conclusion

Notes

3 Dramatic Events

How George Soros sees it

1 The EMS crisis of 1992-93

2 Metallgesellschaft: in the red or in the black?

3 Barings: victim of high-leveraged speculation and loose controls

4 Bankers Trust: caveat emptor

5 David Askin: the fallen star of the mortgage-backed securities sky

6 Instability in emerging markets: Mexican tequila

7 Hedge funds and the collapse of LTCM

8 Conclusion

Notes

Part II Derivatives and Their Markets

4 The Revolution in Risk Management

Farming for the future

1 What can derivatives achieve?

2 Price discovery and volatility

3 Is risk management a fundamental corporate objective?

4 Risk management: science or fad?

5 Risk management: some examples

6 Conclusion

Notes

5 Mutualisation of Risk on Exchanges

Chicago's other side

1 Evolution of exchange-traded financial derivatives

2 Organisation of the exchanges

3 What makes a successful exchange-traded contract?

4 New product developments on the exchanges

5 Exchanges for a global market

6 Conclusion

Notes

6 Customised Risk Management in OTC Markets

How to lose money …