Back in the mid 1960s, a member of our church invited us to breakfast with one of his business associates. His sole purpose was to sell us a "financial product" that they were selling. Just the name "product" raised red flags for me. A product is something you can touch.
Maybe the term "financial product" was created to give substance to services or financial documents that could be bought and sold.
Now it appears my caution of over forty years ago has shown itself to be extremely prudent. "Financial products" became more and more complicated, cut apart, resold in other arrangements, becoming more and more removed from the reality of the agreements that created them in the first place.
Bob's Bank knew Harry Homeowner and could vouch for him. Bob knew better than to lend money to Dan Deadbeat. However, Fred Fast didn't care about Dan's credit because he could sell the loan to Super Bank who would sell it to Mega Bank who would sell it to … None of these knew anything about Dan Deadbeat or that he had already missed four payments. They only had the word of the person or institution further down the sales chain.
And like the tulip bulbs with grossly inflated prices finally had no buyers, these "financial products" with grossly minimized risk suddenly had no buyers. Those who had sold their tulip bulbs and bought no more probably had their proceeds in golden guilders. I wonder where those who sold their "financial products" and bought no more have their proceeds.
I was going to write that at least one could touch the tulip bulbs, but I wouldn't be surprised that the only thing bought and sold was promise of delivery of certain kinds of tulip bulbs.
So, if someone offers to sell you a "financial product", thank them for the breakfast and go your own way.
