The 1.2 trillion is real. The rest is primarily an uninformed generic rant against derivatives in general and thus constitutes a red herring in this case. Notice that the author hasn't even differentiated between the types of derivatives such as futures contracts, forward contracts, options and credit default swaps which shows that the article has been very poorly researched. I'm not saying that a lot of derivatives are necessarily good, but they're not what blew up in the world's face. The subprime mortgages did.
If only it were 1.2 trillion dollars we would be out of this mess already and it wouldn’t be a global crisis.
Red herring? are you smoking crack? did a red herring bankrupt Iceland? Does a red herrig threaten to do the same to England?!
1.2 trillion doesn’t cause this level of problems in a global economy!!! Wake up! *sigh*
30 trillion is the first installment. the rest is coming soon.
You do understand that the sub-prime mortgae default rate is less than 20% don’t you???
” Notoriously lax and understaffed, the SEC did nothing to limit investment banks that bundled, pitched, and puffed non-prime mortgages as the raters cheered.”
I think the above line from the article, substantiates what you are saying. The sub-prime loans were the largest part of the problem. The author seems to want to gloss it over. It was still a quite informative article, fingering a large number of crooks in all administrations.
I agree. The real problem is a lack of transparency with the derivatives, and a non-functioning market that makes the underlying assets difficult to price. Once all the derivatives are netted out, the big scary numbers go away.
>>The subprime mortgages did.
If you liked the crash of the Subprime wave, you’ll LOVE the Alt-A / Option-Arm implosion that’s currently in process.
These predatory debt instruments are merely a symptom.
The underlying disease is the systemic moral corruption of our entire system of governance, financial and otherwise.
When a Nation abandons God and His Law, bad things happen.