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Interest rate hedges are not free. There is no free lunch. Anyway I am not suggesting that there is a way to avoid paying the cost one way or the other, once th
by pishpash 8y ago
Interest rate hedges are not free. There is no free lunch. Anyway I am not suggesting that there is a way to avoid paying the cost one way or the other, once the horse has left the barn when the banks put junk on their books with depositors' money. Unless you can unwind those or claw back years of executive compensation the damage is done.
- pas 8y agoAgreed, but long term rates are and always were (to my knowledge) higher exactly because of the larger uncertainty. That said, "mark to market" is better than some magical nominal pricing. Of course creative accounting is the name of the game, that's why regulators need proper authority to request reports that help clarify things (so that helps them to stay ahead).