The "any questions at this point" comment seems a bit snippy and unnecessary, I was just trying to figure out what you were talking about... but no biggy here goes.
So financial derivatives? Futures, options, shorting etc? Derivatives can play a very important role in the financial system. They can also be abused.
Futures allow farmers (or airlines, or anyone else dependent on commodity prices) to hedge the chances of a bad harvest (or increased fuel prices) by locking in rates early. It's a form of insurance.
Options, (let's go with calls and puts) were initially seen as purely speculative, but combined with an actual position in the underlying security allow someone to make investments while minimizing their overall risk. Again they act as insurance by people who know how to use them. Morons can make naked calls or puts but the generally lose their shirt.
Shorting stocks plays a very important role in the financial world. Investors that short a company are one of the few entities that have a genuine interest in uncovering the dirt in a company. Regulators, share holders, etc may want to believe that a company like Enron is really doing well, but short sellers have a burning interest in combing through every line of their financial statement.
While CMO's got a bad name in 2008 they are still used today as a relatively high yield alternative to US Treasuries and other fixed income investments since the Fed has decided to keep interest rates near zero for the last 6 years.
CDO's also got a bad rap in 2008, but when used correctly they allow the transfer of risk from one party to another. Kind of like a cosigner on a loan. (gross over simplification, but good enough). If you're AIG and you don't actually have the money to backup all the CDO's your writing, then trouble can ensue.
Interest Rate swaps are probably what jacked up your dollar number in that article. They are the vast majority of derivative investments, but they allow companies with variable rate loans to hedge agains the risk of a rate hike, by swapping with a company that has higher, but fixed rate obligations. Those can be a very big win for both parties.
Financial derivatives get a bad rap because they sound scary and most people don't know what they are. They do however play a massively important role in managing risk.