But the risk is vague because the experts on derivatives hide away in the secretive hedge funds - using derivatives to make money as markets slide. They reveal nothing, not even who works for them. Hedge funds tend to be registered in offshore financial centres, and market themselves just to the very rich. Managers tend to take 1% of the invested funds and 20% of the profits in their pay packet, so the results have to be spectacular. These days the most famous hedge fund managers, George Soros, Julian Robertson and Barton Biggs, are shifting to a new generation of even more shadowy and unregulated successors.
Some of them are also immensely ambitious. Soros made $2 billion when he led the run on the pound on Black Wednesday in 1992, when it dropped out of the European Monetary System. It also seems likely that there was a tacit conspiracy among hedge funds, during the financial crisis of 1998, to target the Australian dollar. In fact some hedge fund managers warned the Australian treasury that resistance was futile.
But was the conspiracy bigger than that? Some economists believe the whole crisis of 1997/8 - with hospital patients across the Far East thrown out of their beds and onto the street because their currencies had collapsed - was the result of a hedge fund conspiracy that went out of control.
Derivatives need serious regulation, before it's too late.
Hedge Funds: The courtesans of capital
Peter Temple
John Wiley, 2001
ISBN 0471899739
