Warren Buffett is credited with coining the phrase "financial weapons of mass destruction" with respect to derivatives.  However, after some big unrealized losses on index options that Berkshire has written in the last couple of years, it now appears as though the derivative market is taking aim at Omaha.  Over the last eight days, the cost to insure debt of Berkshire Hathaway has risen to 475 basis points per year.  To put this into perspective, Morgan Stanley's credit default swaps are currently trading at 456 bps, and that is the highest of the big global banks and brokers.  Berkshire Hathaway has long been considered one of the safest of the safest financial companies, but if Black October 2008 has taught us anything, it's that nothing is safe.

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