Financial derivatives grew complex enough that their own creators could not understand them

Evidence

Computers allowed financiers to complicate their gambles immensely. Instead of a simple option-to-sell boring old shares to Jill, Jack could now buy much snazzier options called derivatives. For example, he could buy a derivative that was in essence an option-to-buy a bundle containing shares in a variety of different companies plus bits of debts owed by homeowners in Kentucky, German corporations, even the Japanese government. As if that were not complex enough, Jack could also buy a derivative amounting to the option-to-buy a bundle of many such … derivatives that some super-computer would create. By the time these derivatives containing other derivatives had come out of the computer, not even the genius financial ‘engineer’ who created them could understand what was in them. Complexity thus became a great excuse not to delve into the derivatives that one bought. — Yanis Varoufakis, Technofeudalism, 223

Categorization

• XREF: Connects to Constructing a Market, Performing Theory on derivative complexity as a market-building device; the claim that opacity, not transparency, drove adoption reframes that account. — connects to: Computer-generated complexity caused herd buying of incomprehensible derivatives — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 223; The financial system was deliberately built to confuse its own architects. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 35
• CANDY: That complexity became an excuse for buying instruments nobody could price or understand is a concise, conversational fact about the 2008 crash.

Broader Connections

• The financial system was deliberately built to confuse its own architects. #corroborates (0.88) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 35
• Computer-generated complexity caused herd buying of incomprehensible derivatives #corroborates (0.82) — Yanis Varoufakis, Technofeudalism, 223