I don't know.  We would have some real ballast and resistance to financial debacles if trade policy did not hollow out our economy.  But some smart people predicted disaster. from derivatives.

Warren E. Buffett presciently observed five years ago that derivatives were “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”

Felix G. Rohatyn, the investment banker who saved New York from financial catastrophe in the 1970s, described derivatives as potential “hydrogen bombs.” 

And even if you think Soros is a politically toxic, the guy is brilliant in finance.

George Soros, the prominent financier, avoids using the financial contracts known as derivatives “because we don’t really understand how they work.”

What about Alan Greenspan? 

Well.

For more than a decade, the former Federal Reserve Chairman Alan Greenspan has fiercely objected whenever derivatives have come under scrutiny in Congress or on Wall Street. “What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn’t be taking it to those who are willing to and are capable of doing so,” Mr. Greenspan told the Senate Banking Committee in 2003. “We think it would be a mistake” to more deeply regulate the contracts, he added.

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written by a , October 13, 2008

trading in virtual pieces of paper always was a bit too environmentally friendly for my liking.

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