| ...a remarkably modest proposal for derivatives to be brought under regulatory control. |
The derivatives markets of today have become a high stakes casino of unimaginable magnitude. Wall Street's bets have gone bad, and now the whole financial system is in peril. In a best-case scenario, it appears, the taxpayers will be required to rescue the system from itself. This is why Warren Buffett labeled derivatives "weapons of financial mass destruction."
Amazingly, there seems to be some lingering sense that current-day derivatives properly perform an insurance function.
Case in point: Alan Greenspan, the former Federal Reserve Chairman. Greenspan says the world is facing “the type of wrenching financial crisis that comes along only once in a century,” but, reports the New York Times, "his faith in derivatives remains unshaken." Greenspan believes that the problem is not with derivatives, but that the people using them got greedy, according to the Times.
This is quite a view. Is it a surprise to Alan Greenspan that the people on Wall Street -- said to be ruled only by the opposing instincts of greed and fear -- "got greedy?"
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