Is Financial Innovation Dangerous?

Paul Krugman's column today, Innovating Our Way to Financial Crisis, describes how financial insiders are spooked because they’ve suddenly  realized that they don’t understand the complex financial system they created with C.D.O.s, S.I.V.s, R.M.B.S. and A.B.C.P.   It seems that instead of spreading risk, all these new instruments have spread confusion, possibly triggering a liquidity crisis.  So I asked a financial genius that I knew to read the column and tell me if we should be more fearful of innovation in finance than innovation in IT or biotech.  His answer:

Without even reading the article I can say with certainty we have more to fear from innovation in finance! At least IT & biotech clean up there messes whereas finance always leaves someone else holding the bag!

Of course it could get messy if Ebola virus escapes from the new Level-4 biolab that Boston University is building in Boston's South End.