Somebody says that derivatives are the worst thing in the (economic) world, but this is not an accurate assessment. Short-term debts, in general, are. Sometimes it seems rational to borrow at short maturity: it is less expensive and if you own valuable assets, you can hope to find always some lenders willingly to give you money. But this is not true.
This is the lesson from the Icelandic meltdown: the banks of that country did not use derivatives for speculative purposes, but they were heavily indebted on a short term on the wholesale market and they bought long-term assets. During the global crisis this system, which had been very profitable indeed for the whole Iceland, collapsed and now an entire country has to pay off the debts of a small group of banks. A bad designed neo-liberal model is in shatters, because of mistakes made by both the private financial corporations and the government who confused laissez-faire with a do-nothing policy: a wrong approach in a modern economic system heavily (and inevitably) shaped by rules. A free economy, in the present world, is a different thing.