60 Minutes repeating itself

Like me you might have watched 60 Minutes tonight as they did an episode on Wall Street derivatives. The episode explained that what blew up Wall Street was nothing more than a gambling system that was outlawed in 1907.

Just in case you might have been under the false impression that we are learning our lessons, here's a blast from the past. 1995 to be exact.

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word play

What's most amazing is derivatives are sold as something that reduces risk.

Maybe one day

people will accept the fact that the only way to reduce risk is to have real savings and don't take on debt.
This derivatives play doesn't reduce risk. At best it off-loads it onto someone else.

the models

What I find interesting is we have zero description on even one of these models. I've yet to find a paper or a mathematical description on one and that's a real problem.

They are blaming these math heads but let's see the math, what specifically are they doing.