Defusing Journalistic Hyperbole

Sometimes I wonder if the FT is sponsored by Euronext or the CBOT. Today there is an article by Aline van Duyn on derivatives and termination events. She points out, quite reasonably, that Fannie and Freddie are amongst the largest dollar interest rate derivatives counterparties - because they are hedging the prepayment risk of their mortgage books. Conservatorship is a termination event so any restructuring of the GSEs will need to be mindful of that.

Bizarrely, then, she uses this as the platform for an anti-derivatives screed. She moves seamlessly to credit derivatives - without any logical connection of course other than the D word - and starts talking about derivatives timebombs. Why does no one ever talk about bond market timebombs? Could it be that it is easy to pick on the derivatives markets? Perhaps journalists - like the government official van Duyn imagines in her article - need to spend more time learning about derivatives before blaming all the markets worries on them.