The Economist article starts: "They are, says a former securities regulator, a “Ponzi scheme” that no self-respecting firm should touch. Eric Dinallo, the insurance superintendent of New York state, calls them a “catastrophic enabler” of the dark forces that have swept through financial markets.
Then it goes on to try to justify them.
My comment: The economist Hyman Minsky, who to his credit predicted all of this and was sidelined for his pains, classified derivatives into hedge funds, futures, and Ponzi.
Ponzi schemes are illegal confidence tricks in the real world. Why then are they not illegal confidence tricks in the banking world?
I rest my case.