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Five Firms Hold 80% of ($296 Trillion) Derivatives Risk

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posted on Jul, 27 2009 @ 09:56 AM

First-quarter financials mark the first time comprehensive derivatives disclosure was mandated for all U.S. companies.

While derivatives use among U.S. companies is widespread, an "overwhelming majority of the exposure is concentrated among financial institutions," according to the rating agency's review of first-quarter financials.

Concentrated, in fact, among a mere handful of financial-services giants. About 80% of the derivative assets and liabilities carried on the balance sheets of 100 companies reviewed by Fitch were held by five banks: JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley. Those five banks also account for more than 96% of the companies' exposure to credit derivatives.

About 52% of the companies reviewed disclosed there were credit-risk-related contingent features in their derivative positions. Such features require a company to post collateral or settle outstanding derivative liabilities if there's a downgrade of the company's credit rating.

The Fitch analysts also found that just 22 companies disclosed the use of equity derivatives. Just six nonfinancial firms — IBM, General Motors, Verizon, Comcast, Textron, and PG&E — reported exposure to share-based derivatives.

For the report, the rating agency reviewed first-quarter 2009 filings of the companies, which come from a range of industries and represent almost $6.4 trillion in aggregate outstanding debt. The companies also recorded a total notional amount of derivative positions of more than $296 trillion.

$296 Trillion dollars...
5 companies own that much derivatives risk...simply insane

[edit on 27-7-2009 by warrenb]

posted on Jul, 27 2009 @ 10:32 AM
ok my first post was lost (meh cell phones) but when i saw this number i was mixed with wonder confusion and bewilderment. We have no money for the economy?

with some quick calculations i got the following numbers just to put things into perspective;

if 296Trillion is 80% then the whole derivatives market is $370,000,000,000,000
Thats $54,620 per person in the WORLD.
Or $1,205,211 per person in the USA.

We could all be millionaires!

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posted on Jul, 27 2009 @ 10:36 AM
Forgot to add i used the numbers. rounded to 6.774 billion people worldwide and 307 million in the US.

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posted on Jul, 27 2009 @ 08:29 PM
Nobody cares about the illusion called money.

I wonder when we will all go back to using gold coins?

Back to my calculations (i was at work all day )

if you divided all the money into the current US population, then divided that by 45 years (the standard amount of time people work before they hit retirement) thats about $26,782 per year per person, man women and child.

Money to me is just the biggest scam on earth. If you can have trillions in this market but people are suffering because they can hardly make enough to survive.

posted on Jul, 28 2009 @ 03:13 AM
So, should we consider these 5 companies to be the latest "Too Big To Fail" members? Add them to the next bailout list!

posted on Jul, 28 2009 @ 07:23 AM

Originally posted by jsobecky
So, should we consider these 5 companies to be the latest "Too Big To Fail" members? Add them to the next bailout list!

294 trillion is impossible to bail out lol. Thats about 50x the world

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