Wall Street Bankers are assuring the US public that they are financially strong to withstand the EU shock waves. What they don’t tell you is how much derivative exposure they have on the books that can incur heavy losses if their leveraged schemes go wrong like MF Global. Many of these derivative schemes are hidden and off the books until they implode. In these times trust no bank.
Nailed it.
I forgot who it was who originally said it, but he (or she) called derivatives “financial weapons of mass destruction”.
From what I’ve read, the nominal value of derivatives floating around out in the electronic ether is in the trillions. Some numbers have it pegged as more than the actual global GDP value.
When the Wall Street bankers say anything, I take it with a grain of salt. A very big grain of salt. I certainly don’t trust any bank, no matter how seemingly well-managed and run it is: after all, no one really knows how much off-books exposure they may have to derivatives, and horribly enough, the banks themselves may not even have an idea of their overall exposure level.