I know that bonds are not derivatives, but my point was, that even though value seems to disappear, it doesn't always mean that there is a problem. If you have a trillion dollar of derivatives, and their value goes down to zero, will anyone notice?
Only 20 years ago, it could kill a retiree if the value of his house went up. Bigger value meant bigger taxes, and if the person didn't want to move and sell, the tax could make a normal living as retiree impossible. That was a serious problem, and today, they can simply stop paying the tax, but when the person dies, the house has to be sold and the tax office gets their money first.
To me, it seems that it doesn't make sense to talk about all kinds of derivatives as being the same. It would be interesting to hear more details about how different kinds of derivatives are affected, and what consequences it has.
If something doesn't work as expected, it is because you don't know enough about it. |
