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By Abigail Moses
May 22 (Bloomberg) -- The market for derivatives expanded at the fastest pace in at least a decade last year as the global credit crisis spurred trading in contracts used to hedge against losses, according to the Bank for International Settlements.
Derivatives, including those based on debt, currencies, commodities, stocks and interest rates, expanded 44 percent from the previous year to $596 trillion, the Basel, Switzerland-based bank said in a report today. The amount of credit-default swaps protecting investors against losses on bonds and loans more than doubled to cover a notional $58 trillion of debt.
....
Investors turned to derivatives to bet that the $383 billion of credit losses and writedowns at banks and securities firms since the start of 2007 would push the world economy into recession....
Originally posted by SonicInfinity
Are you sure $596 TRILLION is correct? If you divide that by the number of people in the US (304,059,724 according to Google public data), that is $1,960,141.26 owed by every individual. That's an absurdly large amount of money to be owed to the countries around the world. How is something like this even possible to be paid back? Will the rest of the world let America declare bankruptcy and start anew? I seriously doubt it.
Originally posted by SonicInfinity
Are you sure $596 TRILLION is correct? If you divide that by the number of people in the US (304,059,724 according to Google public data), that is $1,960,141.26 owed by every individual. That's an absurdly large amount of money to be owed to the countries around the world. How is something like this even possible to be paid back? Will the rest of the world let America declare bankruptcy and start anew? I seriously doubt it.
Originally posted by CaptChaos
reply to post by charlie0
Where did you find this 56 trillion of profit in China? Link?
Trouble is, that the 4 to 7% daily movements that we have been experiencing lately in the underlying stock markets send shocks of 3.2 to 5.6 times their derivative stakes in one day! Worse, CDS involved in debt defaults, which are occurring at a brisk pace, represent much larger payouts, in the order of 833 times!