Greenspan was right, derivatives do spread risk… but they don’t cap it.
I’m sure you have often heard the saying “if it ain’t broke, don’t fix it” — something similar should have been said many years ago about the complicated financial derivatives causing so many problems today. The risk associated with mortgages didn’t need to be spread out across the entire industry, the only result such a goal could ever have accomplished is to generate huge profits for massive risk takers abusing the system of “spreading risk” by dumping their crap on everyone else. |
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