http://www.tribalwar.com/forums/archive/t-577539.html
Are you scared yet?
Old article, but I think it is worth reading as the numbers are enlightening.
Tower of Babel Economy | Economy | theTrumpet.com
(http://www.thetrumpet.com/index.php?q=5290.3582.0.0)
So it is alarming that the latest report from the Bank of International Settlements (bis) went largely unnoticed.
According to the bis, the number of outstanding derivative contracts in the global marketplace soared by double-digit percentages last year. Anything going up by double digits should elicit interest in and of itself, but in this case it is the sheer magnitude of the numbers involved that raises red flags.
The bis reported the total amount of outstanding derivatives has reached a practically incomprehensible $1.28 quadrillion. Yes, you read that correctly—quadrillion! And as astounding as this astronomically huge number is, the actual totals are even bigger because this number does not include derivatives related to the commodity markets (which the bis says it can’t track because values aren’t available).
A quadrillion dollars is hard to wrap your mind around. It takes a thousand trillion to make a quadrillion. Start with 1 million and multiply by 1,000, then multiply by 1,000 again, then multiple by 1,000 yet a gain—and then finally you get to 1 quadrillion. You can think of it as more than 92 times the value of all goods and services produced in America during 2007, or almost 20 times global gross domestic product.
(Snippet)
According to DeMeritt, the majority of the $1.28 quadrillion in derivatives is “owned” on somewhere near 95 percent margin!
That has got to be “one of the scariest phenomena in economic history,” he says.
In case you are wondering, 95 percent margin means that for every dollar speculators have spent betting on derivatives, approximately 95 cents of that money was borrowed. For $5,000, a hedge fund speculator can control $100,000 worth of credit derivatives.
according to the U.S. Department of the Treasury, JP Morgan Chase bank has $1.244 trillion in assets. Yet, it has a mind-boggling $91.73 trillion in derivatives contracts on its books. A person could buy the whole bank for a comparatively paltry $129 billion.
That means that if JP Morgan was exposed to just 1.3 percent of its outstanding derivative contracts, and things went wrong, it would be completely insolvent. That doesn’t take into account any other liabilities JP Morgan already has on its books.
“It’s going to get far worse than anyone wants to admit. Even respected newsletter writers hesitate to suggest the truth,” says economic analyst Bob Moriarty. “It’s the end of the financial system, as we know it. Central banks might be able to paper over a few trillion dollars but the fraud is 10 times what they can paper over.”
As Moriarty indicates, U.S. financial markets are nothing more than a huge Long-Term Capital. All it will take is a shock to the stock or bond markets, or maybe sharply rising interest rates due to a run on the dollar, and the major counter parties to the derivatives contracts will fail. And when that happens, living in America all of a sudden won’t be so easy after all.
OMG...OK, I was depressed-very depressed...now I’m thinking suicide...scary beyond belief. How could this have happened? I had never read this article thanks for posting it...I saved it for a night when there are no good horror stories on TV-unbelievable.
So, let me see if I get this...for every dollar spent on these derivatives 95 cents was borrowed? Damn-just damn.
OMG! Hilariously incorrect.
Who loaned the $1,216 trillion dollars? Where did they get it?
Who put up the $64 trillion dollars that wasn't borrowed? Where did they get it?
Kevin DeMeritt, president of Lear Financial, is an idiot!