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

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posted on Dec, 28 2009 @ 11:27 PM
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You prob just stated a better analogy than I did, but you have the right idea.

I would never look to websites like economy-in-crisis.org and the market ticker (Karl D) to find real pertinent information regarding the market/economy.

Most of it is just plainly false.




posted on Dec, 28 2009 @ 11:30 PM
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reply to post by GreenBicMan
 


Wow! Thanks GreenBicMan, for clearing that one up. Lord knows we should all listen to you about financial matters, a guy who lives at home and works at Walmart.

Let's all disregard the Bank for International Settlements' figures. Let's pay no attention to the financial analysis of DK Matai, Chairman of ACTA Open who says:



The Invisible One Quadrillion Dollar Equation -- Asymmetric Leverage and Systemic Risk According to various distinguished sources including the Bank for International Settlements (BIS) in Basel, Switzerland -- the central bankers' bank -- the amount of outstanding derivatives worldwide as of December 2007 crossed USD 1.144 Quadrillion, ie, USD 1,144 Trillion. The main categories of the USD 1.144 Quadrillion derivatives market were the following:
1. Listed credit derivatives stood at USD 548 trillion;
2. The Over-The-Counter (OTC) derivatives stood in notional or face value at USD 596 trillion and included:
a. Interest Rate Derivatives at about USD 393+ trillion;
b. Credit Default Swaps at about USD 58+ trillion;
c. Foreign Exchange Derivatives at about USD 56+ trillion;
d. Commodity Derivatives at about USD 9 trillion;
e. Equity Linked Derivatives at about USD 8.5 trillion; and
f. Unallocated Derivatives at about USD 71+ trillion.


Yes, this article is just garbage. You are the Greenback Guru! So what should we buy and sell tomorrow, oh wise Walmart employee? Please bestow more wisdom upon us. You have our full attention. We will no longer get advice from any investment adviser, accountant, economist, or capital manager. Ask your parents if you can stay up a little longer to give some financial direction to a bunch of idiots.



posted on Dec, 28 2009 @ 11:32 PM
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reply to post by 12GaugePermissionSlip
 


I work at walmart?

hahaha (not that there is anything wrong with that)

OK..

It's just that I am smarter than you, no offense, really. But if you cannot see what the real deal is now that 2 members just debunked this piece of # article then you are the sheep my friend, not me.


By the way head on over to the UP TO THE MINUTE MARKET DATA THREAD and scroll back about 5000 posts and you will see how dumb you sound right now.

[edit on 28-12-2009 by GreenBicMan]



posted on Dec, 28 2009 @ 11:57 PM
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reply to post by GreenBicMan
 


For the record, I remember watching a video in which a world renowned economist and professor was talking about the credit derivatives being similar to the amount claimed in this article. I'll see if I can find it, but this article is not all that far from the truth. These credit derivatives are far greater than the entire world GDP!!!



posted on Dec, 29 2009 @ 12:15 AM
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reply to post by xX aFTeRm4Th Xx
 


Cool, but you guys still are not understanding what leverage and margin is. Ill say it again in a different way.

John, a speculator in this instance, decides he wants to buy 1 lot (or contract) of the EUR/USD in the Foreign Exchange Currency Market (OTC).

1. With 1 contract John actually controls $100,000 (not exactly 100,000 but lets not be too technical.)

2. John, as a speculator, depending on who his broker is, will have to lay down a GOOD FAITH DEPOSIT in order to control this $100,000.

3. We call this LEVERAGE when we find out what amount must be deposited in order to control a bigger sum (stay with me here). Now this GOOD FAITH DEPOSIT is actually called MARGIN. So leverage is the ratio and margin in the amount you must lay down.

4. In this instance, "MARGIN", is actually a short term performance bond meant to trace the movement of your security or derivative.

5. As his margin, trading 1 lot (or contract), again depending on his broker, will have to lay down about $2,000 to control this $100,000 on the OTC FOREX Market. Remember, this is a derivative.

6. Relating to this garbage article, they are saying that John is wheeling and dealing with $100,000, when he is really just getting 50:1 leverage in the derivatives market, plus paying a spread, that only represents his true initial margin amount - nothing more. John after his $2000 or so deposit, must now throw money into his account still though because you buy on a spread basis in FOREX. So he is automatically losing bc of the spread.

So every tick he loses $10 (levered at 50:1 remember!), and he must have all the extra money in his account, or he will get a margin call from broker or his account will just be wiped out due to the odd spreads in that certain OTC market.

You can see how you can fit numbers now to show anything you really want. I read a lot of that on this website, its cool, but don't be mad when you get called out for posting garbage.

Not all derivative markets trade like FOREX, such as ES MINI (SP 500 E-Mini Contract), but I think this is the easiest example.

[edit on 29-12-2009 by GreenBicMan]

[edit on 29-12-2009 by GreenBicMan]



posted on Dec, 29 2009 @ 12:34 AM
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reply to post by GreenBicMan
 


Moreover, when the "high rollers" cannot make
Their margin calls. What happens?

You know when billions,
Ahem, trillions cannot be covered.
Is there a meltdown?



posted on Dec, 29 2009 @ 12:37 AM
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reply to post by Absum!
 


Nothing, then your account is wiped out.

P.S. - that only happens to moronic retail traders (like me at one point haha!), real money managers use a very strict money management system, as do all my algorithms, that do many things - but specifically do not put more than 5% of capital on the line at any one time depending on volatility in the marketplace and many many many other factors.



posted on Dec, 29 2009 @ 12:38 AM
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reply to post by Absum!
 


Plus you are STILL NOT GETTING IT.

I do not have to cover $100,000 in the previous example, just every dollar that I risk over $2000.

So TRILLIONS and BLAH BLAH BLAH do NOT need to be covered, just what you are risking over your initial margin. It is a ZERO SUM GAME at that point - because whenever you lose I win, or v/v. At the end of the day you get your money sucked out of your account and mine goes up - or v/v.

[edit on 29-12-2009 by GreenBicMan]

[edit on 29-12-2009 by GreenBicMan]



posted on Dec, 29 2009 @ 02:40 AM
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From the latest BIS derivatives totals:

The Precious Metals (other than gold) category has more than doubled in six months to $202,750BB.

Primarily , this category represents derivatives written on Silver.

Annual global Silver production = approx $10BB

Global above ground inventory = approx $17 BB.

$202,750BB is approx 20 times larger than annual global production...12 times larger than above ground global inventory.

Another accident waiting to happen.

*

For those with short memories....


Bear Stearns Seizes Assets From Failed Hedge Fund

Bear Stearns told investors in the two hedge funds last week that they'll get little if any money after "unprecedented declines'' in the value of securities used to bet on subprime mortgages, or loans to homebuyers with the weakest credit.

The two Bear Stearns funds had hedged their CDO bets using derivatives. When the hedges and the securities declined at the same time, the funds lost as much as 20 percent of their value, prompting clients to demand their money back and spurring creditors to seek more collateral. That forced the funds to liquidate at least $4 billion of securities in June.

Full Text


Derivatives (CDS) written on derivatives (CDO's).

It was the implosion of two overleveraged Bear Stearns hedge funds via derivatives exposure that precipitated the eventual decimation of the US/European financial sectors.

Counterparty risk systemic progression....

July 2007 - Bear Stearns hedge funds collapse > July/August - IKB Deutsche Industriebank > Saxony State Bank > Bavaria State Bank > Northern Rock > January 2008: Countrywide Financial > March: Bear Stearns Investment Bank > July: IndyMac > September: Fannie Mae > Freddie Mac > Lehman Brothers > Merrill Lynch > AIG > Washington Mutual > Bradford & Bingley > Fortis > Hypo Real Estate > Glitnir bank > Wachovia.

Remember ?



posted on Dec, 29 2009 @ 12:18 PM
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hi,

not to quibble over the actual value of derivative 'paper' that has been issued,
but i heard/read the lower number of $280Trillion...
which itself is lower than the estimated $600+ Trillion just when the crisis
just hit & everyone was throwing up their fiscal arms in gloom-&-doom fright.
Since the engineered takeovers & the FED/Treas issuance of over $13-$30Billion
in derivative payouts to GoldmanSachs through loans to Citi & others
by the FED/Treas finance machine. The big investment Firms & Banks have continued
issuing derivatives & counter-party, unregulated 'paper' at the same pace as before
the panic/crisis in 2008-09, so there may well be $1.4 Quadtrillion
in notational value CDOs, Swaps, Derivatives, Etc Etc out there
in the abstract money world which the FED/Treas has 'guaranteed'
on the backs of the tax-payer public

My own view is that the FED/Treas is in the process of creating a gigantic
'market place' for the continued swapping, trading,buying, selling of all these
notes/bonds/insurance contracts/betting slips that are called Derivativesfor short...

The objective is to create then Guarantee these unregulated slips of paper
that are created out of thin air, and have pennies on the dollar valuations of collateral
backing them up ~if payment ever becomes due~
The FED/Treas and the group of participating upper-crust 'Banks' are constructing
this new market that is completely independent of the old DOW Stock Market which grew
the Industries & brick+mortar companies of the 20th Century.
This new Derivatives Dark-Pool is focused on the Abstract money world,
where the Derivatives neve lose 100% of their value, but exist in a 'market'
that ebbs and flows like the ocean's tides... Constantly churning out a stream of fees,
commissions, taxable events, as these pieces of Elite Betting Slips(aka; derivatives)
constantly swirl in a Global wide 'market place'...

Requiring only US Dollars to trade/buy/sell these paper entries, which will ensure that
the USD remains at the top of the global Reserve Currency Totem-Pole for another 100 years.

Wait until the many Soverign-Wealth-Funds join into this exotic 'Market'= 'high rollers Casino'
designed for the elite investor class, but bankrolled by the MainStreet, mom-&-pop masses...

Wait until all the many welfare and safety-net programs are curtailed or but bare-bones corpses,
wait until the Entitlement programs are swept aside to fund the creation & the guarantee of payment
for the elite's derivative profits.
wait until the social-security COLAs are forever canceled, but the Government Service
employees get theirs.
wait until the food stamps are considered too costly/unhealthy in the new healthcare reform world

i reckon that Then you might concede that i wasn't just being an addle brained,
worry wart, spreading hype and fear about a financial takeover of the world,
as in a fiscal-finance-system "NWO"

thanks,



posted on Dec, 29 2009 @ 12:32 PM
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Thought this article was very pertinent to the discussion in this thread....Will this new stance by the Chinese be a precedent for future countries/companies to do the same. If so, then I think this marks the beginning of the crunch!

Small Chinese Company Tells Goldman To Take A Hike, Refuses To Pay $80 Million In Derivative Losses


Shenzhen Nanshan Power (000037.SZ) (200037.SZ) said in a statement that it received several notices from J. Aron & Company, a trading subsidiary of Goldman Sachs (GS.N), for at least $79.96 million as compensation for terminating oil option contracts. "We will not accept the demand by J. Aron for all the losses and related interests," said Nanshan, in line with the stance it took last December. "We will try our best to negotiate with J. Aron and resolve the dispute peacefully...but the possibility of using a lawsuit can not be ruled out when talks fail," it added. "J. Aron told us in one notice that if we do not pay the money, they will reserve the right to launch a lawsuit and will not send us any further notice." The State Assets Supervision and Administration Commission said in September that it would back state-owned companies in any legal action against the foreign banks that sold them oil derivatives, which resulted in losses when oil prices dived late last year. [ID:nPEK14474] A Beijing-based Goldman Sachs corporate communication official declined to comment.


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