“Protecting people from themselves” and the “compensation culture” are dead weights that kill growth, entrepreneurialism, opportunities (including job opportunities) and investor returns. They add nothing at all to the wealth of society – and indeed prevent the functioning of a healthy economy. What the UK needs right now is to have its people exposed to more risk, not less! They can figure it out – they just need to be treated like adults!

I'm on a £1 for 4 weeks subscription. It's very good in places, but as bad as other papers in others. In the last 2 days we've had columns and letters against HS2 which have all failed to mention capacity ("all for 20 minutes off the journey to Birmingham") and talk about how big projects go overbudget, so we should upgrade existing lines. Despite the fact HS1 was on time and budget and upgrading the West Coast Mainline was a disaster. One letter even quoted the Taxpayers Alliance- who, btw, included the cost of Crossrail 2 as being part of HS2. One columnist talked about how investors would be keen to invest in "Boris Airport", as if that were free money. Somehow, I think those Chinese businessmen and Arabian sovereign wealth funds are probably quite tough cookies.

Anyone else look at the FT much?

In complaints to the SEC made in 2010-11, the employees allege that the main source of overstatement was in a $130bn portfolio of “leveraged super senior” trades.

In 2005 these were seen as the next big thing in the rapidly evolving world of credit derivatives. They were designed to behave like the most senior tranche of a typical collateralised debt obligation, where assets such as mortgages or credit default swaps are pooled to give investors varying degrees of risk exposure.

Deutsche became the biggest operator in this market, which involved banks buying insurance against the possibility of default by some of the safest companies.

Working with Deutsche, investors – many of them Canadian pension funds in search of yield – sold insurance to the bank, posting a small amount of collateral. In return, they received a stream of income from Deutsche as an insurance premium. On a typical deal with a notional value of $1bn, the investors would post just $100m in collateral – a fraction of what would normally be posted by an investor writing an insurance contract.

The small amount of collateral did not matter, the product’s creators said. The chance of several safe companies, such as Dow Chemical or Walmart, all going bankrupt at the same time was infinitesimally small. It might require a nuclear war. The chance of the investors having to pay out on the insurance appeared impossibly remote. The chance of their collateral being used up was inconsequential.

Having bought protection from Canadian investors, Deutsche went out and sold protection to other investors in the US via the benchmark credit index known as CDX. It would earn a spread of a few basis points between the two positions, perhaps 0.03 per cent.

That does not sound like much. But as it amassed ever greater positions, eventually representing 65 per cent of all leveraged super senior trades, it accumulated a portfolio of $130bn in notional value. Over the seven-year life of the trade, the few basis points were worth about $270m.

There was a problem, though, which traders either did not foresee or did not care about when they booked hundreds of millions of dollars of upfront profits. A severe financial shock, well short of nuclear warfare, could also produce disastrous results.

In 2007, credit spreads widened as investors grew nervous about companies’ prospects and liquidity dried up. But spreads on super senior tranches of derivatives structures, representing the safest portion of the capital structure, did not just rise by two or three times – they exploded.