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If you're an average person who was going to lose your home, derivatives enabled the bank to give you a loan. Therefore, derivatives have provided value to ave
by jaredsohn 13y ago
If you're an average person who was going to lose your home, derivatives enabled the bank to give you a loan. Therefore, derivatives have provided value to average people.
However, the 2008 financial crisis showed that when tested, derivatives don't provide much of the value that they were supposed to (shifting risk to those who want it and will quietly suffer the consequences of failure without having spillover effects on the rest of the economy) which essentially retcons away much of that value.
- ItendToDisagree 13y agoI fully agree. With the exception that the derivatives market allowed them to make a more risky loan to you (IE one you may likely have not been able to pay off and they knew it). I would say the value to society at large is very observable as a negative. Getting a low percentage loan that is unstable or even totally illusory is not value. At least not in my opinion.