In 1973, Fischer Black and Myron Scholes wrote a paper called `The pricing of options and corporate liabilities’. The paper described how to price a stock option. Their relatively simple formula represented one of the most powerful technologies ever given freely to the world. Today, over a million people owe their living to the gift that is now called the Black-Scholes model. They are traders, financial engineers, fund managers, accountants, risk managers, mid-office and back-office clerks, software engineers, consultants and regulators.

The techniques invented by Black and Scholes have led to innovation after innovation. In addition to stock derivatives (contracts that “derive their value from the price of a stock”), people now trade interest-rate derivatives, foreign exchange derivatives, commodities derivatives, weather derivatives and even credit derivatives.

Black is American and Scholes is Canadian, they might be deemed the creators of derivatives. However other nationsl all jumped on the band wagon with full knowledge of what they were doing. Everyone was in on the bubble.

Actually the Chinese were following the Japanese model, import raw materials, use a cheap work force that can be worked very hard to create stuff to be exported. Previously the South Koreans, Taiwan and others used the same technique.