The overuse of financial contracts known as derivatives – which were designed to help companies hedge against risk – was widely blamed for triggering the economic crisis of 2008. None other than Warren Buffet has attacked derivatives as “time bombs – both for the parties that deal in them and the economic system.”
But now, for the first time, researchers have found that hedging can increase firm value. (more…)
Today there is a horrific derivatives bubble that threatens to destroy not only the U.S. economy but the entire world financial system as well, but unfortunately the vast majority of people do not understand it. When you say the word “derivatives” to most Americans, they have no idea what you are talking about. In fact, even most members of the U.S. Congress don’t really seem to understand them. But you don’t have to get into all the technicalities to understand the bigger picture.
Among the few names that is known worldwide and very popular ‘Bill Gates’ is one of them. Although Mexico’s telecom mogul Carlos Slim Helu and America’s most beloved investor Warren Buffet are now ahead of him, but they are somewhat unknown to the mass people. None of these two gentlemen developed an operating system that millions of people use everyday or the internet explorer that most of the internet-goers browse through. So Gates is in our daily life for the last many years and will be keeping his position for the coming times as well.
