Derivatives Market Value= $1,400,000,000,000,000. 22 times the GDP of the planet!!

Yes, you read that right! The derivatives global market value is $1.4 QUADRILLION!!
www.bis.org...
That is 22 times the total GDP of every country on the planet. It takes one thousand Trillion to make a Quadrillion. This is the biggest, scariest number I have ever heard of.

That is $190,000 per person on the planet.
www.siliconvalleywatcher.com...

Warren Buffet has called them “financial weapons of mass destruction.” Others have said they’re a form of legalized gambling.

"A derivative is a financial instrument whose value is based on something else. It's basically a side bet,” Frank Partnoy, a law professor at the University of San Diego, told 60 Minutes, CBS News.

Unlike most markets, derivatives have nothing to back them up. They are in essence a “black hole” with no real money behind them and operating completely outside the realm of governments and regulators. Some have even called it a ticking time bomb.
www.sixwise.com...
www.istockanalyst.com...

reply to post by 12GaugePermissionSlip


Let the producers produce baby!!!!


Woo whooo!!!!

So if these things are "worth" 22 times what the planet makes in one year, then it is safe to assume that there is no way this can be supported and therefore collapse of this system should be considered imminent...


What a damned bunch of fools these people are.

They should all get together and request emergency bailout funds from the Obama administration, at a minimum have enough printed up to bailout all of the major derivative market investors.

At the expense of current and future taxpayers, of course, so it isn't a problem, the Obama administration firmly believes in "too big to fail"

Bah, whats another quadrillion here or there anyway?

well i figure it is not to far away before all hell breaks loose and it all implodes..... so stock up folks because after the world falls only the strong and smart are going to be around...

The worst thing is banks and other financial institutions trade heavy in the derivatives market.

This is unacceptable risk for the public and taxpayers.

One crash could make the meltdown we are in now seem petty.

I wonder how this will affect Canada. Not a lot of info is out there on this scenario. Any fellow Canucks out there got any speculations? My immediate thought is to invest in metals like gold and silver of course, which i have done, but what about our energy, hydro etc...we have tons of it. California owes us a fortune in hydro, so i think that will definitely take a hit, but oil and gas out in North East BC, and Alberta is still going strong with lots of pipelines, facilities etc being installed. Plus in BC we have the Nechako Valley which we have recently discovered is sitting on more oil and natural gas than saudi arabia has. They haven't even started work in this area yet, but have been sending out geologists, and other related people to study the area. So i don't doubt, that the gov is making plans at just getting at it and capping it off. Our Ace in the hole sort of thing.

I think sometime in 2010 we will see the final blow dealt to the US dollar. This needs to happen anyways, so we might as well prepare for it the best we can.

Loose monetary policy has caused a speculative frenzy over the past couple of decades ultimately climaxing in the current economic crisis. For a really good overview of how we got into this mess check out this blog:

modern-economic-crisis.blogspot.com...

It's fairly long and comprehensive, but there are a couple of videos explaining what derivatives are, how they are created and how they are used by the banks to hide risk while employing enormous amounts of leverage.

The amount of leverage used in the creation of the derivatives bubble is unprecedented in human history. This bubble that is large enough to destroy the world's financial system once popped.

The creation of this bubble would not have been possible were it not for fractional reserve banking and the Federal Reserve. Here is an excellent blog exposing the dangers of the Federal Reserve System and explaining how are modern banking system is nothing more than a process used to enslave the population through debt.

money-as-debt-debt-slavery.blogspot.com...

reply to post by projectvxn


They are worth what we as a collective race decide value them as.

In reality they are worthless inventions of man when seen from a certain viewpoint although from another viewpoint I do agree that the idea of money does grease the wheels of commerce as it is impractical to carry around commodities or trade commodities without some form of fiat currency.

Of course I am just a armchair economist.

reply to post by whiteraven


Yes, but a system that is open to multiple shocks from every corner of the world is inherently unstable and one should assume(safely) that this system WILL collapse, and it can be anything that causes it. We have Japan thinking about dumping 100 billion to finance domestic spending, Dubai world could cause the CDS market to come tumbling down and drag down real estate(both commercial and homes) creating a cascade effect that blows up the worlds economy in a very short amount of time.

As fake as this purported value may be, they are gambling instruments, not financial instruments. And when people win a bet, they come to get their money..

reply to post by projectvxn



True if the casino decides the claim is valid.

If the casino decides it is not valid then the ball simply lies in the "winners" court with him/her deciding the value of the winnings.

In other words if the casino decides its existence is at odds with the winner then it may take a pragmatic view of non payment.

America is a casino as is life. lol

The Vikings called this god Loki.

Originally posted by whiteraven
reply to post by projectvxn

 

They are worth what we as a collective race decide value them as.

In reality they are worthless inventions of man when seen from a certain viewpoint although from another viewpoint I do agree that the idea of money does grease the wheels of commerce as it is impractical to carry around commodities or trade commodities without some form of fiat currency.

Of course I am just a armchair economist.

You are absolutely correct in saying that they are worth what we collectively say that they are worth. This is exactly how markets work. Bids and Asks take place and ultimately a derivative, stock, CDS, baseball card, peanut, soybean, or a $1 bill are worth exactly what someone else is willing to pay for it. No more and no less. What we are seeing now in the financial markets is intentional and willful overstatement of asset prices on the books of financial institutions since the repeal of Mark to Market accounting.

This blog explains the whole scam:

Modern-Economic-Crisis

"Our entire economy is a house of cards and has been for some time. The leverage and hidden risk employed by Wall Street gave the illusion of prosperity for a short amount of time. Now that these markets have started to unwind, the powers that be are left with no other choice but to try to kick these problems under the rug and hope that nobody notices. The way this is accomplished is through "Mark to Model" accounting.

The only way to prevent the inevitable was to repeal the mark-to-market rule described above and let the banks keep these assets on their books at whatever valuations they came up with in the original overly-optimistic models. This is called mark-to-model accounting.

www.bloomberg.com...

The use of this accounting rule allows banks to pretend to be solvent. They are no longer required to take any more write-downs. If fact, they were able to write-up the assets that they had written down before the rule change. This made it look as though the banks had recovered even though their financial condition had not changed. The problem with this fraudulent accounting is that it prevents a return to equilibrium. They are just kicking the can down the road. Remember that this whole mess started because asset prices were too high for the average consumer to be able to afford their debt payments. Home prices were too high, gas prices were to high, medical costs were too high. This stress is what helped cause the original defaults that set off the sub-prime crisis in 2007."

No wonder nations are now buying gold, people with wealth are buying gold, to back up their future.

But the rest of the people, the littler people that give away their life savings so crocks in big financial houses can gamble with it at will will get nothing after a collapse.

But hey that is how the filthy rich gets to stay in power.

[edit on 16-12-2009 by marg6043]

reply to post by eArth33lr


Hello!

Fellow Canuck here.

Canada definately has the ability to support her self. Our wealth of natural resources is incredible and should the market collapse we will be wishing we produced more in our own country. That being said if we needed to we could produce most of what we need though our current level of lifestyle comforts will take a massive hit. I think our biggest problem would be we have too much space to watch and protect and should markets go south I don't know how well our country of thrity million would manage it all. We must remember that hydro travels along lines and loses its efficiency over long stretches without stations. You can see a good example of this along the trans canada highway. Our energy would be valuable but I think we would need to compensate with alternative forms. The oil field you mentioned is a prime example of a great resource to have in such a disaster scenario.

Cheers

reply to post by thebulldog


Don't be so sure of Canada's stability Bulldog. Canada is in the midst of a large housing bubble as we speak. Canada is also using a fractional reserve banking system and just like everyone else who uses a fractional system, it is doomed to failure:

Economics and Money Creation - How the Federal Reserve System and Fractional Reserve Banking have forced the masses into debt slavery
Money as Debt - Debt Slavery

reply to post by 12GaugePermissionSlip


Disclaimer: The following could be completely wrong. I have done very little study on this very difficult subject. I am, however honestly presenting my understanding, however wrong it may be, of the nature of the total underlying value of derivative contracts.

I'm no expert in derivatives but I think the total market value of derivatives can be a little misleading when considering all the different kinds of derivatives contracts around the world. The value you listed is, if I'm correct, is the underlying value of not necessarily all the assets put together of which there happens to be a derivatives contract on. Rather the total underlying derivatives value is basically the amount that is being bet on.

And with some types of derivatives contract, many different parties can simultaneously bet on the same asset without any party to those contracts ever needing to ever own or trade the underlying asset. This way, whenever two or more contracts are simultaneously written on the same asset, the underlying derivatives value in relation to that one asset would be determined by multiplying the value of that asset by the number of contracts tied to that asset.

It would seem that if my understanding is correct, then the total underlying value around the world would start to become somewhat meaningless; it could be compared to saying the underlying value of a racetrack horse race was not the amount being bet and payed out but the value of each horse multiplied by the number of people who bet on each horse.

What is being done with the TARP money?

Yep...you guessed it.

They take money from the Federal Reserve....they gamble it...keep the winnings and default on the losses like they don't matter...either way..it increases the MONEY SUPPLY.

We are being screwed six ways to Sunday.

reply to post by projectvxn


Ding, ding, ding, ding.... We have a winner.

It has been said that the global economic crisis was a carefully engineered disaster meant to cripple governments of the world and usher in the NWO. The credit derivatives are mathematically impossible to pay back, and will most certain lead to an end of the current financial system.

Because a lot of this originated in the US, and several countries around the world holding billions/trillions of US debt, this will eventually lead to a world currency. These countries holding US debt want a safe 'exit strategy' and a world currency is the perfect answer.

That is why in recent weeks we have seen a strong push by the UN and other countries to create a world bank and world currency. And this is happening as we speak. The first step to a global government? Think about it....

This is really misleading.

When we are talking derivatives, we are talking about a LOT OF DIFFERENT KINDS of securities. They are probably adjusting numbers for their benefit. If it bleeds it leads.

Lets say I am trading the EUR/USD. My margin can be as low as $250 to control $10,000 USD with Micro lots. So I am guessing people like this are using these types of tactics to say this and that is out of control. But it's not.

Does anyone know how much money turns over every day in the FOREX alone? 1.4 Trillion in fact. This is just a garbage article IMO meant again to make the misinformed just more so.

Originally posted by GreenBicMan
This is really misleading.

When we are talking derivatives, we are talking about a LOT OF DIFFERENT KINDS of securities. They are probably adjusting numbers for their benefit. If it bleeds it leads.

Lets say I am trading the EUR/USD. My margin can be as low as $250 to control $10,000 USD with Micro lots. So I am guessing people like this are using these types of tactics to say this and that is out of control. But it's not.

Does anyone know how much money turns over every day in the FOREX alone? 1.4 Trillion in fact. This is just a garbage article IMO meant again to make the misinformed just more so.

Its like taking the value of the worlds insured products and then claiming that this is more than the amount paid for said insurance - um - der - yes. AND that if the world was to claim all the insured products we would go bankrupt - yes - but likelihood is zero.