Employment derivatives: Difference between revisions

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 {{drop|H|unter Barkley was}} an [[interest rate swap]]s trader. That experience gave him an idea. ''Why not hedge away this volatility?'' Different sectors were “long” or “short” the risk of babbling hysteria, which he labelled ''[[π]]'', at different points in the cycle. (“[[Π]]” came from the Greek παράνοια, (''paranoia''), and conveyed the pleasing idea of not just collective madness but circularity, running on a hamster wheel and so on — all fundamental properties of the employment relationship.)
-At its onset, “[[Trad fi|trad-fi]]” firms are [[Short|''short'']] and potty start-ups [[Long|''long'']] ''[[π]]''. Eventually the lunacy levels off, reality sets in and employment relations [[Mean regression|regress to mean]], whereupon the ''[[π]]'' curve flattens and then inverts.
+At its onset, “[[Trad fi|trad-fi]]” firms are [[Short|''short'']] and potty start-ups [[Long|''long'']] ''[[π]]''. Eventually the lunacy levels off, reality sets in and employment relations [[Mean reversion|revert to the mean]], whereupon the ''[[π]]'' curve flattens and then inverts.
 If one could only match off these long and short exposures across the cycle, Barkley realised, firms on either side of the bid could hedge their exposure to [[π]].