Derivatives and financial reform

Gail Collins explains derivatives:

Try to think of derivatives as being like the Tribbles in that classic “Star Trek” episode. For all of history, there was no such thing. Then somebody found the first ones, which looked cute and made soothing noises. We liked them fine, until the population grew to be worth about $600 trillion. When they got into the financial engine, all hell broke loose.

And President Obama is making a strong push in New York today for passing financial reform legislation:

“Some on Wall Street forgot that behind every dollar traded or leveraged, there is a family looking to buy a house, pay for an education, open a business, or save for retirement,” he says in the excerpts released by the White House. “What happens here has real consequences across our country.”

The president’s address at Cooper Union in Lower Manhattan will circle back to another speech he gave at the same location in March 2008 warning of financial manipulation, market bubbles and the concentration of economic power. He repeats some of the same lines he gave two years ago and casts himself as a prescient forecaster before the collapse later that year.

“I take no satisfaction in noting that my comments have largely been borne out by the events that followed,” he says in the excerpts. “But I repeat what I said then because it is essential that we learn the lessons of this crisis, so we don’t doom ourselves to repeat it. And make no mistake — that is exactly what will happen if we allow this moment to pass — an outcome that is unacceptable to me and to the American people.”