With the current financial crisis unraveling with each passing day, one of the financial instruments that has come under renewed scrutiny and being blamed for the meltdown of world financial system is the Derivatives. The last few years have seen the market for various kinds of derivatives grow five fold from $102 trillion to about $596 trillion. Compare this to the size of the entire world economy of $50 trillion. And the scary part is that hardly any of this market is regulated.
Most economists and financial experts including Warren Buffett blame this lack of regulation and oversight on the current financial meltdown. In light of this, The New York Times has a article which looks at Alan Greenspan and his role as a Federal Reserve Chairman in the creation and sustenance of the whole derivatives market.
Read the complete article at Legacy of Alan Greenspan
Also read an article on 10 Myths about Derivatives. Though this may be a bit redundant right now.
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