While ETFs are not derivatives, they build on the philosophy of indirect investing that underlay the derivatives revolution; think of them as “Derivatives for Dummies.” They also create a self ...

By contrast, your neighbors, who bought real insurance on a real vehicle, get only its Blue Book value (and, one hopes, a chastened child). This explains the primary problem with swaps.

Derivatives, unlike other financial assets, are not regulated. In the stock market, there are restrictions on how much you can borrow against your assets. Insurance companies also are regulated.

In Italy alone, local municipalities had derivatives exposures with a face value of €25 billion last year, according to the Bank of Italy. Some academics reckon that losses on these may go as ...