OWS is here to save the day.
Or, haven’t you heard?
What the H is going on? Whatever it is, it ain't honest. This regime knows no honesty.
When they crash, at least there will be a surge in temp jobs.....for robo-signers. The junk mortgages will have to be dumped on someone else.
In a nutshell, a derivative is a financial insurance policy. They are typically cheap because they reflect the (typically very low) probability of the insured condition coming to pass. Derivatives are typically used as hedges to other bets.
That being said, if the “improbable” happens, there won’t be enough $$ in the world to pay these off. The Banks that sold them look at it as free $$, but G-d help them if the bill comes due. Kinda like a bookie to who can’t pay off his bets.
Derivatives? Old news.
Having stolen all the real capital, how much of the Feds monopoly money are the banks using to finance OWS?
The Feds need to outlaw national banks and return the control to each of the individual 50 states! No bank is allowed to cross state lines, nor is any bank allowed to hold any interest in other state banks. Very drastic I know, but probably too late for what is inevitably coming. America is doomed!
Have a few of those banker and politician dudes explain themselves with a hemp noose around their necks standing on the scaffold and their descriptions of derivatives would be more straight forward
Burn, baby, burn.
You have to dissect the multi-trillion dollar figures thrown around. 80% of this total exposure is in the form of plain vanilla Interest Rate Swaps.
In a vanilla Interest Rate Swap, the 2 parties involved in a transaction are only exchanging fixed interest payments for floating interest payments on an agreed-upon notional. It is not the notional itself that is being exchanged. Please place these huge figures in their proper perspective
For example: 2 parties may engage in a Swap transaction on a $100million notional amount. They are not exchanging the entire $100million. They are only exchanging interest payments on that $100 million on a monthly, quarterly, semi-annual or annual basis (whatever they agree to), so the true exposure is nowhere near the $100 million notional amount of the swap. If a bank on one side of the transaction goes under, the other side hasn’t lost $100million, or anywhere close to it.
That being said, things are not looking too stable. It is very likely that at least one European bank will fail, which could set off a chain reaction in the US with some of our big banks which are hanging by a thread.
Derivatives are more complex than just ‘side bets’ and they have an important role to play in the world of finance and international banking. They allow firms to hedge exposure to obligations such as interest payments, and project financing costs just to name a few uses. Yes, there is an element of speculation involved, but the market is very liquid and there are regular bilateral netting and portfolio compression cycles that take place. These are processes by which offsetting trades are effectively “torn up” thereby removing them from the balance sheet of the banks involved in the transactions. Too much to elaborate upon here, but these compression cycles occur regularly and every big bank with derivatives exposure participates. Think of these cycles as maintenance, in which the deadwood and underbrush are removed in order to prevent a potential forest fire.
$75 trillion... notational
assuming 100 : 1 risk, that means roughly $750 billion exposure. assuming offsetting bets, the minimum exposure would be $375 - 750 billion.
let them fail
the small banks will buy the assets... and become the new big banks, but with less risky practices
of course, these people are all lefties... their intention is to collapse the system. therefore I expect their failure and the 0bama group to bail them out.. with our money... jacking up the debt even higher
which means... they will continue printing more dollars, diminishing the dollar further
expect gold to continue to rise (as well as all commodities with inherent value)
The derivatives market creates massive fantasy (not real) wealth which becomes concentrated in a few hands and then it is used as a claim on real wealth (real property, portions of paychecks, ban savings, pensions etc of people both living now and yet unborn) through bailouts and various ‘stimulus’ schemes.
Those claims are being made now and will have repercussions for many generations. Here is but one example.
A Huge Housing Bargain — but Not for You
http://www.thestreet.com/story/11224917/1/a-huge-housing-bargain—but-not-for-you.html
The back door bailout of BOA is another example. If they are made whole through FDIC, what, if any, do you think will be left over to cover depositor losses?
Dangerous times.
Quant ping!
Does anybody know what notional means?
Enormous amounts in derivatives were based on mortgages for real estate—houses. It appears that the author omitted that.
bookmark
What Cooked The World’s Economy?
http://www.freerepublic.com/focus/f-news/2209313/posts
And...
Here’s the link for the evidence in the information from the “Bank for International Settlements,” as mentioned in the full version of the excerpted article linked above.
http://www.bis.org/publ/otc_hy0805.pdf
...and a quote from it.
“The over-the-counter (OTC) derivatives market showed relatively steady growth in the second half of 2007, amid the turmoil in global financial markets. Notional amounts of all categories of OTC contracts rose by 15% to $596 trillion at the end of December (Table 1), following a 24% increase in the first half of the year.1”
Went a great gun show today. Not as crowded as the ones right after Obama’s election, but much more crowded than the ones of the past year or so.
Vendors were saying AR-15s weren’t moving much anymore. Shotguns and other old standby SHTF stuff was moving briskly, though.
