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Lorenzo Bini Smaghi, the director for international relations of the Italian treasury, which is responsible for negotiating euro issues with the Vatican, said: "It's a speculative position with the face of the pope.
"The bank is taking a speculative position by lending money on that property," said Thomas J. Waters, a housing-policy analyst who has taken a look at the real estate financing.
That is undoubtedly true, but from a wider perspective the key question is why Long-Term Capital was allowed to build up a speculative position so large that the firm's collapse could have threatened the prosperity of the entire country.
Without the enthusiastic support of the Wall Street establishment, there is no way that Long-Term Capital could have built up a speculative position so large that its collapse would have posed, in the words of William McDonough, the president of the New York Federal Reserve Bank, "unacceptable risks to the American economy".
In explaining how impossible to value some contracts were, Buffet gave the example that, if desired, he could easily purchase a speculative position on "the number of twins to be born in Nebraska in 2020".
In explaining how impossible to value some contracts were, Buffet gave the example that, if desired, he could easily purchase a speculative position on "the number of twins to be born in Nebraska in 2020". Those words should have raised red flags on how improper derivative contracts could easily simulate a massive underground gambling house.
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The bank contended it was trading to hedge its broader risks, but in fact it built a sprawling speculative position that spun out of control.
One less-sweeping proposal would be to strengthen existing regulatory limits on the size of the stake that each speculative investor can hold in a given market, called speculative position limits.
The empirical results from Granger causality reveal that return lead speculative position, which indicates that non-commercial or managed money traders are a class of positive feedback traders or trend followers; and also reveal that the position changes held by speculative traders will cause crude oil price movement.
Fair's fair, and for what Roubini claims to seek (the leveraged speculative position, we guess) then the CFTC data are nearer, as anyone with a professorship in this kind of stuff might suspect.
There was a clear exit from long speculative positions and an increase in short positions in WTI crude [the US benchmark].
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com