Amazing op-ed from resigning Goldman Sachs derivatives director Greg Smith, discussing how the firm’s culture became more about taking advantage of clients as opposed to serving their best interests.  Unlike derivatives desks across the spectrum, we have no “axes” to grind here, we don’t hunt elephants, and we don’t advise our clients to trade in the illiquid exotic derivatives that turned credit underwriting on its head over the past decade.  Greed kills! (New York Times)

Interesting articles about the challenges of over-the-counter (OTC) derivatives documentation, and how the ISDA ’standard’ language (HuffPo) used in some swaps is designed to favor one party.  Also, another lesson learned from Greece: don’t use interest rate swaps and/or cross currency swaps to alter debt-to GDP ratios.   (Bloomberg)  Another few reasons to get independent advice on this stuff, folks.

How the Black-Scholes equation helped foster the derivatives market and contributed to the banking debacle. (The Guardian/The Observer)

Op-ed from Barbara Roper, Consumer Federation of America, talking about how the CFTC’s final rules for swap dealer business conduct were softened to benefit swap dealers.  Cardea Partners are independent representatives for anyone, public or private, entering into swaps and options contracts.  And yes, even though such a representative is not mandated for trades with certain parties under certain conditions, the benefit of understanding what you are getting and the quantifiable savings realized with a swap advisor make having one the right choice. (Huffpost)

Our annual take on where SIFMA, LIBORs, Treasury Yields, swap rates, and other market indices will head in the new year.

2012 Interest Rate Forecast – Cardea Partners