Just as Buffett said, I agree that Derivatives are Financial WMD. But, I would look at this way, just as Nuclear Power(the source of weapons of mass destruction) can be used to generate power (which is what india badly needs to alleviate its power shortage situation to sustain growth) Derivatives if used in the proper way will help grow the financial system in a healthy manner. And so is true for vice-versa.
RE:Derivatives: The time bomb in our financial system
by Venkataramana Marthi on Mar 15, 2008 07:16 PM Permalink
For every winner there is a loser. If the gains and losses in winning and losing can be within certain limits all is fair in love and war. But if they cross a limit then it's doomsday. In this game of futres and derivatives, as long as the same party wins and loses sometimes it's OK. But when the losses are beyond reconciliation then it's doom for all the people associated with it. Too much of simplicity in accounting and projections the world would not have seen so much growth in the whole world trade!! Brace yourself guys for some turbulent times ahead after some smooth sailing!!
