DERIVATIVES AND THE WEALTH OF NATIONS

Laurent L Jacque

Chapter 1 in Global Derivative Debacles:From Theory to Malpractice, 2015, pp 1-11 from World Scientific Publishing Co. Pte. Ltd.

Abstract: At a time when the world economy is engulfed into the mother of all financial crises, it is indeed tempting and opportune to find derivatives guilty as charged for creating financial chaos. This book is not an indictment of financial derivatives to be feared as “financial weapons of mass destruction” nor is it a call for multilateral disarmament or signing a nonproliferation treaty! Derivatives may be feared but they cannot be avoided nor ignored (abstinence is not an option) as they permeate many of the key goods and services which are at the core of modern life: for example, the price of energy is largely influenced by oil and natural gas derivatives and the cost of securitized consumer finance (variable rate home mortgages and automobile loans) embodies interest rate derivatives and credit default swaps…

Keywords: Derivatives; Debacles; Options; Swaps; Futures; Forwards; Financial Engineering; Market Manipulation; Rogue Traders; Speculation; London Whale (search for similar items in EconPapers)
Date: 2015
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