February 18, 2011

(I wrote a 365-word post for the3six5.com, a collective diary. Actually, I wrote two. This is the other one.)

Always stare straight at the camera. If your eyes are moving around, you look like you have something to hide.

I was on TV today for a five-minute interview on one of the business channels. The first time I was on TV, no one told me to stare at the camera, and I looked terrible. Now I know the drill. I was talking about derivatives regulation, right after a story about an options trader who made $8 million betting on Weight Watchers.

The topic was actually interesting, at least to finance nerds. If companies have to put up cash to cover potential losses on their derivatives transactions, will they have less money to build factories and hire workers? That was the point of a recent report arguing that derivatives regulation will increase unemployment. But there’s a flaw in that argument. If companies don’t have to put up cash, they are still on the hook for their derivatives, so that will reduce their access to credit. In a perfect market, you get the same result either way.

But that’s hard to fit into a sound bite, which makes the whole exercise seem slightly absurd. Did I really help anyone understand the issue? Or was I just a prop for the news show? And was it worth driving an hour each way?

Usually people like me justify things like this by pointing to option value: it’s always good to be nice to the media and to keep your name in circulation because it could be useful later. But when does it end? I just accepted a great job as a professor at the best law school within an hour of my house. When do you stop buying options and decide you’re happy with things the way they are?

But my daughter sure was excited. As I was taking her to school, she said, “Tell Mommy when you will be on TV so she knows when to turn on the TV and watch you!” And I got to wear the pink tie she gave me for Christmas (along with a bottle of lotion and a cloth to wipe my iPad.) So it wasn’t a complete loss.

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