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View Diary: Derivatives: An Investment on Nothing! (14 comments)

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  •  They didn't cause the mess. (2+ / 0-)
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    debedb, jamess

    They may have accelerated it by creating a false sense of security (ie, if I can shift my risk to someone else, why not buy more risky assets?), but the cause was a real estate bubble, not derivatives.  

    Derivatives did tank AIG, which was a huge accelerant in the crisis.

    People talk about derivatives because they sound scary, but we can't take our eyes off the ball, which is sounder banking capital ratios, fewer mortgages, and better mortgage underwriting.

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