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Derivatives-No short cut to making money

I have been reading about the derivative transactions that a number of companies entered into with banks. It is clear both the companies and the banks entered into these risky speculative transactions to make quick bucks. Now when the transactions resulted in huge losses, the companies are blaming the banks and vice versa.

Companies are taking banks to court saying that they were not aware of the risks ot that the banks didn’t explain the risks associated with these transactions to them clearly. In addition, the companies are trying to blackmail the banks by stating that they have violated FERA laws as speculative transactions are not allowed. Banks on the other hand, are suing their clients for non-payment.

Companies are also suing the banks in order to avoid accounting for the losses. Why? Their stock value will come down. So what are they doing? They are postponing the accounting of their losses by filing a law suit against the banks.

Who are the people who will benefit? Who else but the lawyers.

What are a circus? But I don’t think anybody is to blame. What we have to blame is our greed. We need to realise that there is no short cut to success, wealth or fame.

Avinash Narula
management-talk.com

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