Hypocrisy du jour, credit default swap edition | FT Alphaville

Hypocrisy du jour, credit default swap edition

I think that derivative products… the CDS on sovereign debt have to be at least very, very regulated, rigorously regulated, limited or banned, this is a personal position on financial instruments

– Christine Lagarde, Europe 1 radio, February 28 2010

The French arm of LCH.Clearnet, Europe’s largest independent clearing house, will on Monday launch clearing of credit default swaps – a victory for French efforts to ensure the processing of such off-exchange derivatives instruments is done in Paris.

– Jeremy Grant, The Financial Times, March 29 2010

Ahem. FT Alphaville saw it coming, but still — Ça nous coupe le souffle. Of course, CDS clearing has been welcomed as a good thing almost everywhere (do note this dissent).

It’s just rather odd to create clearing houses for something you’ve claimed you want to ban. To quote the master:

Ceux de qui la conduite offre le plus à rire
Sont toujours sur autrui les premiers à médire.

Those whose conduct gives room for talk
Are always the first to attack their neighbors.

– Molière, Tartuffe, Act I, sc. i (1664)

(And a tip of the hat to Sam Jones for Mme. Lagarde’s bons mots).

Related links:
“Nada de lo que está ocurriendo en el mundo, incluidos los editoriales de periódicos extranjeros, es casual o inocente” – FT Alphaville
What is it with politicians and CDS? – FT Alphaville
The not entirely unexpected Germano-Greek inquisition – FT Alphaville
Is there an alternative to exchange-traded CDS? – Felix Salmon