There is a wise use of derivatives for hedging, and a risky use of derivatives for speculation. There must be speculation in the markets to provide liquidity, however, those that are speculators should fully acknowledge that. Where individuals and companies get into serious trouble is by starting out with the idea of risk reduction and either through greed or error, they morph into risk takers.
ARMS
ARMS are great for those that will move every few years, but if you stay put, it’s not a good option for the most part. There is a balancing act there that must be considered before jumping into a low payment and winding up very poor.
Japanese market
The Japanese market took forever to bottom. Our S&L scandal was lightening fast comparatively and it still took a while. For a market to hit bottom, you have to flush out all the sellers and the Japanese, perhaps for cultural reasons, don’t like taking losses, so they hung on and didn’t bankrupt the banks nor the property owners in a large way. That cleansing, is far more likely here than there.
Dr. Douglas Rice 