To: LesbianThespianGymnasticMidget
Financial derivatives have threatened the global economy several times. Long Term Capital Management in the 90s, the 2008 crash, now this. Financiers think they have cracked the code to yield unlimited profit by taking counter positions on both sides using derivatives, all upside and no risk. Then something unexpected happens, something their math didn't forsee, and they are screwed.
It should be clear by now that massive reliance on them is playing with fire but I guess the potential upside is like crack, they can't stop themselves.
5 posted on
11/05/2019 8:37:34 AM PST by
pepsi_junkie
(Often wrong, but never in doubt!)
To: pepsi_junkie
A derivative is simply a bet on how an economic indicator or some other event will go. If the event goes your way, you win. On the other hand, such as in an economic recession, a war or some other institution’s collapse, if a bunch of your bets go the other way, you lose, your lenders lose, and the trickle-down effect can, on a large enough scale of bets, cause the collapse of an entire economy.
Current exposure to derivatives across the world, last time I read, was as high as 1.4 quadrillion dollars.
38 posted on
11/05/2019 1:32:29 PM PST by
Tolerance Sucks Rocks
(Show me the people who own the land, the guns and the money, and I'll show you the people in charge.)
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