Following are edited excerpts from the Berkshire Hathaway annual report for 2002.
The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. Central banks and governments have so far found no effective way to control, or even monitor, the risks posed by these contracts. In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.
This was quoted as recently as Jan 2008 with respect to credit default swaps in a LA times article on the economy.
