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EDF does trading too. It's part of the business, in the world as it is today. It just requires risk management and doing only what you actually understand.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sun Sep 21st, 2008 at 03:41:18 AM EST
[ Parent ]
I think Constellation understood the instruments they were trading - what they didn't understand was the need to set aside enough cash to increase their collateral in case of a credit downgrade, which apparently is also what took AIG down.

This is interesting because counterparty risk is relatively well understood, but the risk of yourself being downgraded seems not to be.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Sun Sep 21st, 2008 at 05:22:44 AM EST
[ Parent ]
Trading is needed, but what I meant is that it won't be the main business anymore, instead an instrument for hedging rather than profit.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid (arvid.hallen at gmail.com) on Sun Sep 21st, 2008 at 10:03:31 AM EST
[ Parent ]

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