Derivatives, as Accused by Buffett

[Guest kumar]

 

http://dealbook.nytimes.com/2011/03/14/derivatives-as-accused-by-buffett/?ref=business

 

...,What worries him most is the big financial institutions that have millions of contracts. “If I look at JPMorgan, I see two trillion in receivables, two trillion in payables, a trillion and seven netted off on each side and $300 billion remaining, maybe $200 billion collateralized,” he said, walking through his thinking. “That’s all fine. But I don’t know what discontinuities are going to do to those numbers overnight if there’s a major nuclear, chemical or biological terrorist action that really is disruptive to the whole financial system.”

 

“Who the hell knows what happens to those numbers?” he asked. “I think it’s virtually unmanageable.”....