From NYT :
Financial instruments like adjustable-rate and subprime mortgages have allowed millions of people to get homes they could not otherwise purchase, and research shows that most of these tools have been used intelligently.
Um... define "most". How about the billions in loans that are being defaulted on? And... the reason these folks couldn't otherwise buy these houses is because they couldn't afford them. and they are in danger of losing them. But the banks didn't care because they were going to package up the loans and sell them so they didn't actually take on the risk.
Hedge funds have proliferated to help investors manage risk. These things exist precisely because investors want to smooth out volatility. In the old days, a blow to, say, the Texas economy could have dried up lending in Texas, but now funds flow globally, and money from one part of the world can shore up weakness in another.
oh.. please.
