Warren Buffet: Derivative “Time Bomb” a “Mega-Catastrophic Risk”

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Grant Lawrence–Bodhi Thunder

One of the world’s richest men, Warren Buffet, is getting out of the Derivatives Market and warns that Derivatives are an investment time bomb. He believes that it has the potential of ruining the whole economic system.

...Derivatives are financial instruments that allow investors to speculate on the future price of, for example, commodities or shares – without buying the underlying investment….
Berkshire Hathaway, the investment group led by Mr Buffett, is pulling out of the market, closing down the derivatives trading subsidiary it bought as part of a huge reinsurance company a few years ago.

In his letter Mr Buffett compares the derivatives business to “hell… easy to enter and almost impossible to exit”, and predicts that it will take years to unwind the complex deals struck by its subsidiary General Re Securities.

Buffet warns:

…The rapidly growing trade in derivatives poses a “mega-catastrophic risk” for the economy and most shares are still “too expensive”…bbc co.uk

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But Buffet should know that when another major collapse comes, the financial fraudsters will simply transfer the losses to the people and give themselves big bonuses.

The people will likely accept it, just like they always do.