Word: firms
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...firm's bets are paying off. On Monday, Goldman said that it had made nearly $2 billion in the first three months of this year alone. But some analysts say Goldman, which received $10 billion from the government through the Troubled Asset Relief Program, is generating most of those profits by making risky bets on interest rates and other fluctuations in the financial markets with money it has received from the government. Goldman says it would like to pay back its TARP loans as soon as possible, and on Tuesday the company raised $5 billion in a stock offering that...
...what is clear is that Goldman is taking significant trading risks, opening the firm up to the possibility of big losses at a time when regulators and lawmakers are trying to reduce the dangers of the nation's financial system, not increase them. At the end of the first quarter, Goldman's measure of value-at-risk, which tracks how much the financial firm could lose in one day, rose to $240 million. That was up over $80 from just over a year ago, and it is 10 times the risk the firm used to take on a daily basis...
...Screening for breast cancer susceptibility is advancement in the same direction. The previous legal boundaries for appropriate screening (a 90-100 percent chance of the disease affecting the child) were violated in this case. As advances allow us to screen for smaller and smaller susceptibilities, firm boundaries must be drawn to keep science in check. Policymakers must consider the range of genes that cause the same level of susceptibility as BRCA1 and evaluate the implications of permitting such extensive use of pre-natal screening. Ultimately, a level of susceptibility for which it is permissible to screen must be determined...
...Although CDSs work like insurance for investments, buying and selling them is similar to trading stocks. This generates a hazardous web of firms that hedged bets by both buying and selling CDSs. If one firm defaults, it cannot pay out the next firm’s insurance that can cause another firm to default, and so on. To further complicate matters, since CDSs are unregulated, there is no authority to which these transactions are reported. Thus, no single firm knows how many CDS deals have been made, and firms do not know to whom most CDSs have been sold. Additionally...
...Finally, many CDSs insured products ill-suited for insurance. Insurance works best when a disaster is random, infrequent, and independent from other disasters. This is not the case for mortgage-backed securities. In the housing market, prices are dependent on the surrounding area. A firm can attempt to mitigate this problem by slicing up mortgages and repackaging them in complex financial instruments like collaterized debt obligations, but the risk persists. If enough houses drop in value, others will follow, and this domino effect is the current housing crisis...