Unregulated global derivatives debt market hits $647 trillion mark

Posted on June 5, 2012 by The Extinction Protocol

June 5, 2012 – GLOBAL ECONOMY – The hits just keep coming and with $647 trillion reasons to worry, aka, the total notional derivatives now outstanding as of Q4 in 2011 per the Bank of International Settlements just released this afternoon and published officially on Monday. Of course the problem is that as one can see in the graph above, the amount of Gross Credit Exposure has returned to 2008 levels, something the world might want to pay attention to. Once the lessons of the mistakes of the past are ignored, the risk factor increases proportionally and with Europe teetering on the edge of a Lehman event, the increase in interest rate derivatives might well indicate a new risk that has not been accounted for: A sudden collapse of the Euro currency below the 1.20 or even parity level. Such an event would make Lehman look like a picnic but there is more bad news beyond that as it is not just interest rate derivatives that have increased past 2008 levels as the chart above demonstrates, but some idiots placed bets on the currency markets which means that a collapse of the Euro creates an irreversible game of dominoes and destruction: Unfortunately for us common folk, no one has taken the time to explain the implications of a 10, 20, or even 30% decline in the value of the Euro versus the US Dollar in a compressed time period. This is one warning sign of many from the report but the other one is more mundane and ties to the Federal Reserve’s mandate, er, unwritten mandate to support the U.S. equity markets by laundering money through its member banks to purchase stocks and give the illusion of a strong economy. –John G

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14 Responses to Unregulated global derivatives debt market hits $647 trillion mark

Barbara Richards says:

June 5, 2012 at 10:02 am

things are really heating up, Alvin

Russia Today- Bilderberg 2012 Power Elites Plot in Secrecy
Published on May 31, 2012 by RTAmerica

For the last half century an organization of the world’s most powerful political and corporate elites have met annually, in secret all around the world. There is no official press coverage, and the meetings happen behind closed doors. This year the power elite are meeting in Chantilly Virginia, right next to Washington DC. Abby Martin of RT covers the first day of protests and finds out why people are so concerned about its secrecy and what they speculate is being planned.

http://www.democraticunderground.com/101732011

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- The Extinction Protocol says:
  
  June 5, 2012 at 10:15 am
  
  No doubt…
  
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Bone Idle says:

June 5, 2012 at 11:01 am

The can kicking can’t go on much longer.
There is 56 Trillion dollars of refinacing to be carried out worldwide in July.
Much of this refinacing must be made to banks and soveriegns who are either technically bankrupt, under huge stress or their credit rating is junk
It will only take one major bank or sovereign to falter and the whole lot will come crashing down.

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- The Extinction Protocol says:
  
  June 5, 2012 at 1:24 pm
  
  The system is very near an implosion and the sovereign debt crisis is making it worst; accelerating the explosive growth of the derivatives market that is trying to cover every credit risk in the world in hopes people won’t default. So they artifically inflated the insurance covereage 16 to 20 times all the money known to exist in the world.
  
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Dennis E. says:

June 5, 2012 at 12:18 pm

Yes, being pretty bold about it too……..So, the actors must be in place and its show time.

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AWM says:

June 5, 2012 at 2:15 pm

Qoting Barbara’s RT post,
“For the last half century an organization of the world’s most powerful political and corporate elites have met annually, in secret all around the world. ”

Heck, I’d meet in secret too if I was responsible for $647 Trillion.
The damage done by these “elites” is measured in lives lost and opportunities squandered.
By poverty, disease, and suffering beyond comprehension.

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Paul says:

June 5, 2012 at 4:08 pm

What is scary is the $647 Trillion in estimated derivatives is actually on the low end. I have read other articles that put the amount of derivatives as high as $1.5 Quadrillion dollars. Warren Buffet called derivative instruments financial weapons of mass destruction. Thanks for posting this article.

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- The Extinction Protocol says:
  
  June 5, 2012 at 7:54 pm
  
  I’ve heard a $1 quadrillion mark too. That’s still 25 to 30 times all the money on the planet…which means there is no way from stopping this bubble from bursting once the pin comes out at the party. Credit has destroyed the world and the Bible warns us about the evils of usury and compounding people into the ground beyond their means. The Eurozone gave every nation a credit card and told them to basically go party and grow their economies and the only country that managed to stay even someone afloat is the country with the largest cash reserves and banks- Germany, the place where all the capital is now flowing. This has all the insidiousness of an elaborate ponzi scheme written all over it.
  
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Paul says:

June 5, 2012 at 4:13 pm

Also wanted to note that according to U.S debt clock org. the U.S derivative exposure is 727 trillion dollars. That is just the U.S!

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- The Extinction Protocol says:
  
  June 5, 2012 at 8:12 pm
  
  “One of the earliest CDS deals came out of JPMorgan in December 1997, when the firm put into place the idea hatched in Boca Raton. It essentially took 300 different loans, totaling $9.7 billion, that had been made to a variety of big companies like Ford, Wal-Mart and IBM, and cut them up into pieces known as “tranches” (that’s French for “slices”). The bank then identified the riskiest 10 percent tranche and sold it to investors in what was called the Broad Index Securitized Trust Offering, or Bistro for short. The Bistro was put together by Terri Duhon, at the time a 25-year-old MIT graduate working on JPMorgan’s credit swaps desk in New York—a division that would eventually earn the name the Morgan Mafia for the number of former members who went on to senior positions at global banks and hedge funds. “We made it possible for banks to get their credit risk off their books and into nonfinancial institutions like insurance companies and pension funds,” says Duhon, who now heads her own derivatives consulting business in London.” http://www.thedailybeast.com/newsweek/2008/09/26/the-monster-that-ate-wall-street.html
  
  http://georgewashington2.blogspot.com/2009/12/woman-who-invented-credit-default-swaps.html
  
  They hired these young ‘so-called geniuses’ out of the Ivy League schools to come up with all these derivative math formulas involving long algebraic problems that basically was a way of moving your money through an abstract maze into their banking accounts. Every time you carried a one; they were carrying $1000 dollars of your money off to foreign bank accounts.
  
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Tod says:

June 6, 2012 at 4:06 am

this is a joke. money is just a number on a computer. debt? lmfao. I loan you a dollar for a dollar 23. but I only make a dollar twenty a week well u owe me .03 and interest on that had doubled because your late. but you only pay me so much, how can I get ahead. your supposed to work until your 67 now because we loaned you too much paper which we made from trees that grow in your back yard, but your not allowed to have the prints to make them your selves, you pay us to make your life hell, our name is the government, we are puppets to the bankers & C.E.O’s of all major co-orporations which pollute our rivers, lakes & sea’s. then blame it on us & raise taxes to pretend to fix it, but only make it worse. every one complains but isn’t willing to actually do something about it, quit complaining & grow some balls, fire the politions, grow your own food or help a local farmer, stop eating GMO chickens, cows & plants, fish, everything, stop using the banks!!!

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mark g says:

June 6, 2012 at 4:25 am

A few of my friends get together once a month and play poker. Often we have too much to drink and start making large bets with the chips we handed out at the beginning of the game. The bets get so large that we just laugh. No one gets paid in the end; it all just disappears because it was “notional”. Same thing with derivatives. No one will get paid. Its all make believe.

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- The Extinction Protocol says:
  
  June 6, 2012 at 5:17 pm
  
  Musical chairs: Lehman Brothers had a derivative portfolio worth $35 trillion dollars at the time of its collapse
  
  Until the music stops and liquidity dries up; then there is a problem. Derivatives in bankruptcy, some lessons: “When it filed for bankruptcy, Lehman Brothers had nearly one million derivative contracts outstanding. This article tells the story of some of those contracts, and the lessons that can be drawn from their fate. Lehman’s counterparties faced a dangerous choice after its Chapter 11 filing: terminate their contracts early—and potentially face large termination payments—or await the uncertain judgment of a bankruptcy court. In adjudicating the cases of those counterparties who chose the latter option, the court overseeing Lehman’s bankruptcy has answered some questions about what happens to derivatives in bankruptcy, while leaving others unresolved. As derivatives, particularly swaps, are central to structured finance, Lehman’s story should be of interest to any structured finance practitioner.” http://www.iijournals.com/doi/abs/10.3905/JSF.2010.15.4.007
  
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JerseyCynic says:

June 6, 2012 at 11:02 am

oh Tod, oh Tod, OH TOD — I am blue in the face, my friend. (and have alienated most close to me)

The one tv show I have watched over the years has come to an end. it was the best ending ever!
I’m turning it all off now (except for visits to alvin’s site, of course)
[youtube http://www.youtube.com/watch?v=JYpOb-PQyNg&w=420&h=315%5D

I doubled the size of the garden this year! Lot’s of work to do

To All:
http://thinkexist.com/quotations/grace/

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