If it was pointed out that risk did not disappear, those who participated in the market would explain with a sigh that derivatives “spread” the risk to the far corners of the globe, where it would be absorbed by so many people that it could never hurt anyone. In his 2002 shareholder letter, Buffett called derivatives “toxic,” and said they were “time bombs.” At the shareholder meeting that year, Charlie Munger described the accounting incentives to exaggerate profits on derivatives, and concluded, “To say derivative accounting in America is a sewer is an insult to sewage.” In his 2003 letter,
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