Where are the derivatives that lessen risk?

So, we have a full-fledged crisis in sub-prime mortgages and thousands of little people -- average Joes and Janes -- are losing their homes. Where's that mighty miracle of modern finance, the derivative? There's reportedly over $200 trillion in nominal values of derivatives, which, their proponents say, are supposed to lessen and help manage "risk." So, when do we start seeing the supposed saving hand of derivatives in this crisis?

Or could it be that $200 trillion in derivatives are meant only to benefit the "big boys" of world finance, and not the little people?

As a renter who is priced out of the local market, my first response is to say "HA! what were you expecting." Buyer beware and all that stuff. And then I think about the first time buyers who must abort their biggest financial move in their lives, because of unscrupulous and predatory bankers. They are out on the streets and forced to start over again, but starting with a black mark against them.
I guess our decision is to either bail out the homeowners at risk and then force the financial institutions to reorganize mortgage packages that are reasonable and allow for future investment savings. They have already proven they are not to be trusted in balancing their drive for profits with community financial security.
Or we bail out a few failed institutions after they used live bait on a fish that always assumed it would always eat only dry pellets. We will say "shame on you," find a few frauds, demonize a few board execs and then let the States pass consumer protection laws against such future practices only to be obliterated later by Federal regulations.
That's the problem when we consider housing as a commodity and at the whim and travails of the market. We let speculation, risk and our desire for false-inflated equity in developing our Nest Egg for the future, while we should only be thinking of it as a Nest.

If this is the case, then my sympathy level falls dramatically. Of course, shame on the lenders when the mortgage packages were misrepresented or if banking trickery took place. For that I blame the State and Federal regulators for letting such practices continue. These aren't new 'tricks' they are trying to pull.
When someone treats their home as a commodity to either create some available funds (maybe as a refinance to draw some equity) or as a Monopoly house (hoping the market will fare well), then cross your fingers and assume the risk of failure like a business investment. You can't cry foul if your greed and desire of wealth mislead you into a bad business agreement.
If these people are getting into the business of real estate speculation, then one would expect that they are versed in it's risks and dangers. If they aren't, then they are suckers. Doesn't the FHA make one of the requirements for a 1st time buyers loan to take a class in home financing? I assume this is to protect and educate those people who are just starting to dip their toes in the real estate market. I would be very mad if we ended up bailing out real estate marketeers just because they were stupid.