Interest Rate Swap Quotes

market leader in interest rate swaps. There was a natural role for a blue-chip corporation with the highest credit rating to stand in the middle of swaps and long-term options and the other risk-spawning innovations. The traits required of this corporation were that it not be a bank—and thus subject to bank regulation, and the need to reserve capital against risky assets—and that it be willing and able to bury exotic risks on its

they pale by comparison to the trading volumes of hedge funds, to say nothing of the levels of trading in exotic securities such as interest rate swaps, collateralized debt obligations, derivatives such as futures on commodities, stock indexes, stocks, and even bets on whether a given company will go into bankruptcy (credit default swaps). The aggregate nominal value of these instruments, as I noted in Chapter 1, now exceeds $700 trillion.

Questionable investment deals certainly contributed to a number of municipal financial crises that occurred after the 2008 stock market crash. Jefferson County, Alabama, for example, entered into interest rate swaps that helped swell its debt burden to $3 billion when interest rates collapsed. The county sued the lead underwriter, J.P. Morgan, on the grounds that it misled the county and investors. The Securities and Exchange Commission also imposed significant penalties on the underwriter in 2009. Detroit similarly entered swaps that the bankruptcy court ultimately settled for much less than their face value after the bankruptcy judge raised significant questions about the swaps' legality and enforceability.

Of the components of IQ tests, Ashkenazim do well on verbal and mathematical questions but score lower than average on visuospatial questions. In most people, these two kinds of ability are highly correlated. This suggests that some specific force has been at work in shaping the nature of Ashkenazi intelligence, as if the population were being adapted not to hunting, which requires excellent visuospatial skills, but to more urban occupations served by the ability to manipulate words and numerals. So it’s striking to find that Ashkenazim, almost from the moment their appearance in Europe was first recorded, around 900 AD, were heavily engaged in moneylending. This was the principal occupation of Jews in England, France and Germany. The trade required a variety of high level skills, including the ability to read and write contracts and to do arithmetic. Literacy was a rare ability in medieval Europe. As late as 1500, only 10% of the population of most European countries was literate, whereas almost all Jews were.7 As for arithmetic, it may be simple enough with the Arabic numerals in use today. But Arabic numerals did not become widespread in Europe until the mid-16th century. Before that, people used Roman numerals, a notation system that has no zero. Calculating interest rates and currency swaps without the use of zero is not a straightforward computation.

The history of DPG, like the history of derivatives, is not well known, even at Morgan Stanley. Most people there have heard of DPG because the group is such a huge moneymaker. However, few employees, including me, realized how new the group was. DPG did not exist before 1990. In fact, Morgan Stanley didn’t even sell many types of derivatives until a few years ago. Previously, the firm’s limited derivatives activities had been scattered throughout the bank, and overall profits from such sales had been relatively low. In fact, although certain types of derivatives have existed for thousands of years—farmers used forwards to hedge and the ancient Greeks used options to speculate—most derivatives innovation has occurred in the past decade, and most of the derivatives Morgan Stanley was selling in 1994 were new. The majority of derivatives DPG sold—including structured notes and interest rate swaps, which I will describe in detail later—didn’t exist before 1980.

A few other companies were accused of overexposure to derivatives. David Garrity, an analyst at McDonald & Company, even called the Big Three automakers “basically banks masquerading as manufacturing companies” because of their financing subsidiaries. Chrysler Financial Corporation, a unit of Chrysler, had $1.5 billion of interest rate swaps and $535 million of currency swaps, and parent Chrysler had another $1 billion. Even Goodyear Tire & Rubber Company had a $500 million derivatives portfolio. I wondered who didn’t own derivatives.

Go outside. Frequently. Step outside anywhere and find a leaf and permit it to blow your mind. Check out its delta of veins. Run your finger on its underside. Taste it. Check if it has hair. Crumple it and smell it. Go further, to a forest of any size, a forest clearing, a clump of trees, or even a spot under a single specimen—someplace where, even though you may hear cars and dogs in the distance, you can sit on soft, uneven ground, unseen. Consider the unspooling ribbon of human affairs that the surrounding trees have witnessed and with what interest or indifference they may have watched. Inspect the ground and picture the interlaced fingers of mycelium and roots that swap sugar and water and carbon and data, a mushroom-assisted conversation that betrays care among trees. Notice the mosaic of leaves catching light or the weave of needles on the ground. Be still and birds will invade your copse. Trees, even in small groups, exhale monoterpenes that reduce stress, lower blood pressure and heart rate, and perhaps even trigger dopamine. So stay long enough to feel your mood change, watch shadows shorten or stretch. Get caught by rain or snow or nightfall. Get a little lost.