“...$516 trillion derivatives system ...”
What? $516 TRILLION, theres not even that much money on the world.
Are they talking Monoply money? What is this hocus-pocus shnanagins junk?
I think it would be easier to understand the Unified Field Theory then to understand this financial stuff.
Ask Toddster any questions you might have. He’ll be happy to answer them.
I think that might be the problem.
Shhh?
I definitely get the feeling that these financial “genuises” has so goobered up the system with these incomprehensible instruments that no one knows what anything is worth anymore. People can understand a share of stock in a real company and a mortgage on a real house. What they can’t understand (or value) is what happens when you lump all these things together every which way. At its core, this is really scary stuff because these derivatives have so permeated our financial system.
And yes, it will keep happening again and again until they are outlawed. This is one huge mess.
“...$516 trillion derivatives system ...”
What? $516 TRILLION, theres not even that much money on the world.
Are they talking Monoply money? What is this hocus-pocus shnanagins junk?
I think it would be easier to understand the Unified Field Theory then to understand this financial stuff.
To me, it really is “betting beyond your means” and the time value of money run amuk.
When you buy a house, you don’t have all the money to pay for it. Instead, you take a considerable risk that you will pay for it over the next 15-30 years. Typically, it you did not have to spend one dime on living expenses, you could pay for that house in 3 years. But that ain’t real. Reality is more like those 15-30 years.
Similarly, a bank lends out more money than it really has. It is betting they will stay in business so long as people keep paying back those loans over time.
Options and futures - same basic idea.
So, these credit default swaps just follow from the same basic principle. I have to believe that the big banks are seeing this stuff is a mistake and they are going to find ways to cut back. I can only hope.