1994-04-14 - Re: Quants vs Congress

Header Data

From: “Perry E. Metzger” <perry@snark.imsi.com>
To: jkreznar@ininx.com (John E. Kreznar)
Message Hash: 6e3dfc6a2c00834516321a3736f5fe5f4a6f1be69b2c0b0c312eea5078a8e111
Message ID: <9404141227.AA27757@snark.imsi.com>
Reply To: <9404140219.AA09878@ininx>
UTC Datetime: 1994-04-14 13:34:22 UTC
Raw Date: Thu, 14 Apr 94 06:34:22 PDT

Raw message

From: "Perry E. Metzger" <perry@snark.imsi.com>
Date: Thu, 14 Apr 94 06:34:22 PDT
To: jkreznar@ininx.com (John E. Kreznar)
Subject: Re: Quants vs Congress
In-Reply-To: <9404140219.AA09878@ininx>
Message-ID: <9404141227.AA27757@snark.imsi.com>
MIME-Version: 1.0
Content-Type: text/plain

John E. Kreznar says:
> > Big hearings in Congress today about how evil derivatives and the quants 
> > who build them are.  They are a threat to government as we know it.  Don't 
> > tell anyone but the "intermediation of political risk" was one of the 
> > greatest invention of the 1980s.  Combine same with strong crypto and you 
> > almost have to feel sorry for the public employees in our midst.  Watch 
> > out for a little downsizing.  
> Aw c'mon Duncan.  Derivative of what?

Derivative securites. Usually "derived" from some base securities,
commodities, or other derivatives. Options, futures, swaps, and other
synthetic trading instruments of varying degrees of liquidity and
fungibility are all derivative instruments.

> What's a quant?

Someone who does valuation of fixed income or derivative securities
based on mathematical models. Its a bit of a fuzzy term.

> Where was the term ``intermediation of political risk'' used?

Well, presumably hedging, futures and insurance markets can be used to
offset political risks.

> I love your postings when I can make sense of them.  This one is so well
> encrypted I can't.

Everyone should know a bit about the securities markets -- an educated
individual owes it to themselves to understand them.