Derivatives 'madmen' prove Buffett wrong

"The range of derivatives contracts is limited only by the imagination of man or sometimes, so it seems, madmen," was how Warren Buffett, the world's most famous investor, described the world's fastest-growing market. Buffett was right in his March 2003 portrayal of a financial industry that was growing almost without limit. He was wrong, though, to question the sanity of the architects, who are building an edifice that is transforming the way investors play the fixed-income markets. The most sophisticated financial engineering is in credit derivatives - obligations tied to corporate ...