[dennisw]

That's what I was wondering: Just how much of these trillions are in positions that off-set one another. Just as.... a Vegas casino can take in $200M in wagers on the Super Bowl, but... not really have anything at risk...since they offer wagers on both sides. Is that how it works on these "hedge positions"?

#1 There is no "house" that handles and regulates the derivative bets that hedge funds make or that any financial entity (Bear Stearns for example) makes

#2  With derivatives you have two parties making an elaborate bet based on arcane mathematical formulas as applied to financial instruments such as bonds, CMOs etc

#3 .Worst part is these two parties are betting against each other with lots and lots of borrowed money

#4 To borrow such money from Bear Stearns and others they do have to have some collateral. But lately their collateral seems dubious because it is based on sub prime mortgages and other shaky investments

[groanup]

#2 With derivatives you have two parties making an elaborate bet based on arcane mathematical formulas as applied to financial instruments such as bonds, CMOs etc

Maybe you could give us an example of this?