As far as I can tell one main reason for a lot of what exists in our present system is there for the sole reason of generating profits. It's like a never ending game of chess, with chaotic rules, where the players gain and lose position but can never actually win or lose.

Wherein lies the problem is the players are in true fact leveraging a range of assets many of which ought not be exposed to high levels of risk but because of the overall structure in fact do have that exposure. People who have 401K and IRA investments are theoretically conservative investors but still have equivalent high risk exposure and have most certainly suffered huge losses in all of this. When 401K and IRA were invented that level of risk wasn't presented as part of the deal. Quite the opposite actually.

The fact is the game has changed and has introduced this risk where it once was minimal. Where laws were changed it was with an eye on profits with only passing consideration to risk. Between the tech meltdown of 2000 and now this an entire generation of workers have their retirements seriously compromised. The consensus among boomers is they have been scammed big time. There is a broad recognition that this cannot be fixed at the ballot box. Which leaves a broken and floundering system looking for leadership but which is unwilling to swallow the medicine that is the only practical remedy.

Considering that there is a 4-volume, 4700 page description of derivatives, they are probably complicated. See Satyajit Das "The Swaps & Financial Derivatives Library: Products, Pricing, Applications and Risk Management, 3rd Edition Revised (Boxed Set)".

I once worked on embedded software in an organization managed by electrical engineers who had not done any software development. Later I worked on server and web software in an organization where the managers were all former mainframe software developers.

In any fast-moving industry, the managers tend to be old and clueless. Few managers have the continued intellectual capacity or have the discipline to devote the required effort to keep up.

The Senate would be a good example of very old and very clueless managers.

The latest numbers available indicate the derivatives market is on the order of $1.4 Quadrillion which dwarfs by what, 20X the total amount of the globe's traded equities and bond markets. But, nobody really knows...

And let's be clear, the overwhelming vast majority of these instruments are CASINO BETS against an asset or revenue stream where the issuer and the counterparty are not directly involved in the asset itself--hence the term 'derivative.'

Simple swaps are not necessarily bad in that they reduce the risk to the actual buyer/seller of the gamut of equities/bonds that exist. But, all the rest is a bunch of drunks with computers leveraging their ass off and using technology 'innovation' to evade the rules--to the extent the rules exist and are enforced.
And thanks to Allan Greenspan there is no regulation of this marketplace in partucular the shadow finance houses that have sprung up as a result.

Obama should declare any derivative not owned by an 'involved party' illegal. But, to do that he needs buy-in from the rest of the major financing and banking sectors otherwise capital will simply abandon the US Market. This partly explains why we're propping up AIG and their major counterparties in Europe.

I hope Obama is negotiating a global solution behind the scenes but even with his skills he might not be able to continue dancing on the head of this pin. The numbers are too staggering, the problems too intractable and the forces involved too powerful.

While there are many similarities to '29 the depression may have just been a prelude to the 'big one.' Egads, think i may have to start drinking again...

The world cannot really abandon buying our debt. First, what has already been bought is bought. Done deal. If China sells some of its US bonds, someone else has to buy them. Our government is not in the situation held by many homeowners - no one can foreclose and demand repayment. Much of the new debt being created is being bought by our own Fed. The Fed is buying this new debt with brand new dollars they created with the hit of a few computer keys

The past few decades, our new debt was bought by investors. That new debt competed on the open market for dollars. That has all changed in the past few months. The Fed is, in effect, monetizing the debt. New dollars are being created out of thin air. None of which, at least for the short term, will cause inflation because the money supply was drastically reduced through the various economic slides we have recently experienced.

debt" v. the word "currency

Other than a few souvenir coins from the days of silver dimes, my stash appears to consist exclusively of iou's (theyoweme's) from something called the Federal Reserve.

Are you saying I'm holding "mere" paper????