I have seen the wise guys on Wall Street blow up themselves and this economy and get on the welfare line with taxpayers and the Fed bailing out these turds. The Fed now has on its books most of the toxic assets these turds created. Same thing happened in some European nations
Sure you saw some good things and good ways to hedge against risk
Sure you described simple futures contracts which I have no problem with
But blinders on, you have ignored how much damage Wall Street has done. It it were up to me I would ban most derivatives. The complainers can go trade them in Dubai or London for all I care
Or I would mandate that all derivatives are traded publicly on a transparent market I can see on the internet like the futures markets
This Wall Street mischief is same as the concocted global warming and the scientists behind it. I don’t trust them and I don’t trust Wall Street. They both cook up a trashy product that requires billions and trillions in spending and wealth transfers and abilouts
Like Volcker said— We got along just fine without swaps and derivatives
And yes, there are scummy guys and gals on Wall St, just as there are on Main St.
My point was this... ultimately, it is up to the buyers of bad investments to prevent con-artist anywhere and everywhere from scamming them.
Banks and other presumably sophisticated investors bought these derivatives and I place the fault squarely on their shoulders. These products were not sold to individual investors...there are laws to prevent that or at least to require enough transparency that the man on the street can understand what he is buying.
But I don't recommend enacting laws that prohibit the development of financial product because, for the most part, it is difficult for legislators and regulators to write rules in such a way that good ideas are permitted yet bad ones are squelched.
There is always someone just around the corner attempting to sell a pig in a poke or some good swamp land, isn't it socialistic for the government to take away a buyer's right to make his own decision.
And knowing how crooked legislators are (they are the very worst con-men...even worse than those on Wall St), how could we ever expect them to enact laws that don't benefit their friends and hurt their enemies (in the financial biz). Goldman would love to help out in just such an endeavor.