Derivatives serve a purpose.Quote:
Originally Posted by bbobb
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Derivatives serve a purpose.Quote:
Originally Posted by bbobb
Yep, that purpose currently being threatening to flat out destroy our economy
The most basic use of derivatives is to hedge against whatever they're derived from, whether its someone protecting their stock portfolio with appropriate option positions or farmers hedging against their crops on futures commodity markets. Ultimately, you can't blame the marketplace, you have to blame the irresponsible traders. Even margin loans can be used responsibly as long as you aren't a greedy fucker. Most markets feel over regulated as it is, but all it takes is one retard to take advantage of another to ruin it for everybody.
There are some really silly trading products out there though. The place I work for offers binary touch FX, which is basically an agreement saying "if this currency pair reaches X value by a certain time, then you owe me this, if not i owe you this", which just sounds like gambling to me.
I didn't say they were perfect only that hedges and various other things make derivatives useful. Derivative abuse like anything else is of course problematic. Try not to generalize with such broad strokes.Quote:
Originally Posted by bbobb
You can crash an economy with regular financial instruments. The problem isn't the concept of a derivative. The problem was the lack of regulation, lack of information (ratings), moral hazard (TBTF), and a lot of incompetence that was never punished. Alan Greenspan was one of the worst public officials in this country's history.
Quick comparisons from my last check of last year to my first of this year:
Total taxes went up 9.1%, almost entirely driven by FICA-OASDI, which I am guessing is related to Social Security.
Health care premiums for my wife and daughter went up 5.9%. Blech.
Well the payroll tax break ended, but that was a stimulus action not intended to be permanent, so how much really changed beyond that?
The Social Security stuff was in line with estimates. I don't like it, because I'm not getting any of that back.
The health insurance premiums keep climbing and are going to explode next year when a big chunk of Obamacare goes live.
Not that I'm excited about this because I haven't seen my check yet and I'm nervous, but can you call it the affordable care act like normal humans.
Except that that's a complete lie. It's going to continue to drive premiums way, way higher.