Derivatives are betting on a bet on a bet and so on and also trying to game (cheating) the system so the bet comes out your way. However the others involved are also gaming (cheating) the system. The taxpayers end up the loser just like the S&L and real estate scams.
Whatever...does the word hedge mean anything to you or do you think it is a gardening term?
Forbes article on derivatives and other financial schemes.
Snip: We can’t say when this will happen. We can’t say which bank or which particular instrument will trigger the debacle. What we can say with virtual certainty is that if we continue as now is that it will happen. Because the scale of the trading is larger, and because the depleted government treasures are not well placed for another huge bailout, the impact will be worse than 2008.
http://www.forbes.com/sites/stevedenning/2013/01/08/five-years-after-the-financial-meltdown-the-water-is-still-full-of-big-sharks/