I think it's easy for people at all levels to have an idea or opinion about debt and leveraged investments, but derivatives remain arcane and foreign.
Of course, I unfortunately also share the fear that the intensity of crisis is ramping up, LTCM->Enron->Lehman/Bear/AIG->??? and the amounts of speculative capital being risked and lost (and recovered) are increasing seemingly by an order of magnitude each time.
Doug, perhaps someone you know can talk about derivatives on BTN?
On 3/15/12, Chuck Grimes <c123grimes at att.net> wrote:
> While not news at least it connects the dots:
>
> ``Toxic culture and greed, or "competitiveness" if you prefer, in the
> investment banks isn't a sufficient answer to why derivatives have become
> the foundation of today's global economy, however. The criminal activities
> of some bankers driven by these more pervasive cultures can't explain the
> economic crisis and the vast injustices that are being perpetrated still in
> the name of "economic recovery." The interest rate swap crisis stinging
> local governments and enriching the banks is a case in point.
>
> The windfall of revenue accruing to JP Morgan, Goldman Sachs, and their
> peers from interest rate swap derivatives is due to nothing other than
> political decisions that have been made at the federal level to allow these
> deals to run their course, even while benchmark interest rates, influenced
> by the Federal Reserve's rate setting, and determined many of these same
> banks (the London Interbank Offered Rate, LIBOR) linger close to zero. These
> political decisions have determined that virtually all interest rate swaps
> between local and state governments and the largest banks have turned into
> perverse contracts whereby cities, counties, school districts, water
> agencies, airports, transit authorities, and hospitals pay millions yearly
> to the few elite banks that run the global financial system, for nothing
> meaningful in return. These perfectly legal cash flows measuring globally in
> the hundreds of billions, from the public to the banks, dwarf anything that
> is the result to fraud.''
>
> http://www.counterpunch.org/2012/03/15/a-toxic-system/
>
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