Sunday, 19 July 2009

Derivatives and the political dance

The following comments from Mark Mobius highlight the fact that the real challenge for better oversight of derivatives comes back to, as always, the compromises made by politicians in having to pay attention to the lobbying groups and special interests that fund their campaigns, and their principal and primary interest which is to hang on to office.
LONDON (MarketWatch) -- Mark Mobius, executive chairman of Franklin Templeton Investments, said Friday he fears the U.S. and other countries will fail to regulate derivatives properly, setting the stage for a repeat of current financial turmoil in a few years.

"I'm afraid that the political pressures on politicians in the U.S. and other countries will be so great that they will be unable to make the proper changes in regulations," Mobius said in an interview Friday at Franklin Templeton's London offices.

Derivatives, complicated financial agreements that derive their value from underlying commodity prices or interest rates, are at the heart of the current financial crisis, Mobius said.
Mark Mobius on 20 years in emerging markets

Mark Mobius, executive chairman of Franklin Templeton Investments, talks to MarketWatch's Tom Bemis about the changes in emerging markets investing over the past two decades and his outlook for China and for frontier markets in Africa, Latin America and Asia.

"Derivatives can be a good thing, but if they're not properly regulated they can be very destructive," Mobius said. 'This will all come home to roost again,' he said.

No comments:

Post a Comment