Derivatives are risk-transfer vehicles (RTVs).
There is BIG risk associated with RTVs. To manage the risk associated with emerging markets (exporting your job), for example, rich people buy and sell it by proxy. It looks like gambling but it is really buying and selling it to yourself, making it look like the financier is taking all the risk when it is actually being shifted to people that increasingly feel the Bern of economic desperation (Rifkin’s ZMC society).
When the big risk emerges by default, argued to be a neutral-valued, anonymous, objective ontology (Objectivism), risk managers are then hard at work adjusting for the externalities. Credit is extended to make the bad money good (the good-after-bad game) by a financial institution. This is known as a special purpose vehicle (SPV). Goldman Sachs, for example, is famous for being a vehicle of special purpose.
Operating with reverse interest rate swaps, for example, investment banks, and now commercial banks and insurance companies (using your deposits and premiums) with the repeal of Glass-Steagall, can take everything the counterparty has due to “unforeseen triggers”–which suggests it is a gamble, but no, this is how the risk transfers using derivative, credit-protection devices (“products”).
Financial experts say that bad things just happen unexpectedly by default. Derivative contracts (the obligation to pay the asking price on time, on demand) are used, however, according to a master agreement (yielding to the “product”) devised by the International Swaps and Derivatives Association (ISDA).
If you don’t think your “natural identity” should be the commodity fetish (the product) of the ISDA, Vote For Bernie Sanders!