Will Buffett Be Burned by Derivatives?

The Oracle of Omaha, who once derided derivatives as "weapons of mass destruction" has apparently entered into a derivatives bet that could ultimately result in losses of over $37 Billion. According to Reuters, some shocking high points from what I used to consider the ultimate in conservatism:

• The SEC released correspondence from Berkshire (BRK.A) Friday, two weeks after Berkshire said more than $1 billion of losses on derivatives led to a 77 percent decline in profits for the quarter.
• Berkshire's derivatives could require the company to pay over $37 billion between 2019 and 2027 if the Standard & Poor's 500 and three other stock indexes were lower than when Berkshire entered the contracts.
• Buffett has said he expects the contracts to be profitable. But falling equity values had by the most recent quarterly report forced Berkshire to write down $6.73 billion on the contracts.

I wonder if his very public, large stakes in companies such as GE (GE) and Goldman Sachs (GS) were an attempt to turn public sentiment in the markets before they spun further out of control, eroding the paper value of these derivatives? The income from these contracts brought him a few Billion dollars in premiums to play with this year, but for the man who said he doesn't invest in technology stocks that he doesn't understand, he took a pretty bold step into the derivatives cauldron and may just get burned.