A derivative is a derivative is a derivative

THE SUBJECT OF today's lecture, class, is the United States of Wall Street, in which we will explore the nature of, um, derivatives. Inasmuch as I don't have any idea of what I am talking about, I feel quite qualified in dealing with the subject. That is also true, I fear, of everyone in America except corrupt Wall Streeters and their lobbyists who are in the game solely for huge profits.

Wall Street, you should know, is the metaphor for tall luxurious office-like townhouses in lower Manhattan whose shadows so darken the street at the base of the ravine below that it would lead one to walk through the wrong door on an otherwise sunny day. Worse yet, few people, except those who have studied the ways of the Medici, Midas, Louis XVI and Shylock, are documented to entered the thick carpeted offices somewhere up the elevators. Wall Street loves shadowy mysteries as purposefully complicated as Rubik's Cube.

But we were going to talk about derivatives, weren't we? My pocket dictionary tells me that it is a "financial instrument" and it is really nobody's business how, say, Goldman Sachs, got away with making huge profits from gypping other people by "'betting" with the house odds in its favor while armies of unsuspecting investors lost everything in the rigged transactions that guarantee the sellers risk-free profits.

When I asked a banker to amplify the definition, he told me to "hush", adding that not even he fully understood how derivatives worked because like everything else these days, they were created in a remote province of China. "All you have to know," he said, "is when to buy long and when to buy short," which added nothing to my understanding of investment banking.

One of the problems as information tumbles out of Goldman is that so much of the vocabulary appears to be coded, as with a military invasion disguised with words to confuse the enemy. For example, you can go the "vanilla route," or the "exotic" route in your in investments (don't hold me to this!) or lean on someone who professes expertise in "structured product trading". After awhile, you may find yourself looking for MBA partners in a penny ante game with their hands always on the table.

There was a time when a lot more of us understood insider trading, which was nothing more than a broker with advance knowledge of a trade could...well, whatever he could do, to exploit the market.

Not anymore. With billions of dollars floating around in easy profits in those cash machines high above Wall Street, you need to know no more than the shortest distance from one trade to the next. Derivatives come in quite handy, but for the life of me, I don't know how.

There, now, has anything in today's lecture been helpful to you? A confession: I was going to mention hedge funds, but couldn't find anyone who could give me a hint.