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Thread: Deriviatives?????????

  1. #1

    Default Deriviatives?????????

    OK, I read that we have $20 Trillion in derivatives in this country in only like ten to fifteen banks. I was wondering how much in derivatives would have to be paid out to destroy our economy over night? I mean, how much can the FED afford to cover with out killing us? I now if too many go under there is no way we can cover it. And does anyone have any ideas of what companies are most likley to go under?

  2. #2

    Arrow Its actually 50 times larger...

    Quote Originally Posted by atlas mike View Post
    OK, I read that we have $20 Trillion in derivatives in this country in only like ten to fifteen banks. I was wondering how much in derivatives would have to be paid out to destroy our economy over night? I mean, how much can the FED afford to cover with out killing us? I now if too many go under there is no way we can cover it. And does anyone have any ideas of what companies are most likley to go under?
    I have read if you include all synthetic derivatives, and mortgage backed, standard options and futures...there are more like $1000 Trillion in the entire World today...and probably 75% are traded among the major banks.

    They are always making up stuff, to sell, and buy, so profits can be 'made' (up). There is always a new sucker.
    Buy Gold and Silver, then wait.
    Gold, Silver: Beautiful Insurance in Ugly Situations
    Monetary triangle: U-Unit of Account, W-Store of Wealth, M-Medium of Exchange.
    PMs are unencumbered tangible fungible fractionable portable durable liquid insurance...without counter party risk; elementary, "Internet Safe" w/o tech issues.
    Silver cheaper than Gold, both precious !!
    Gold and Silver are elemental with no man-in-the-middle.

  3. #3

    Default

    Quote Originally Posted by HardlyPeeved View Post
    I have read if you include all synthetic derivatives, and mortgage backed, standard options and futures...there are more like $1000 Trillion in the entire World today...and probably 75% are traded among the major banks.

    They are always making up stuff, to sell, and buy, so profits can be 'made' (up). There is always a new sucker.
    Is it possible they could end up buying their own junk back in some sort of circular trading?

  4. #4

    Default

    the objective is for bankers to do the gambling with ficticious capital and then claim "too big to fail status".

    that's the que for their boy at the federal reserve to start talking money printing, inflating & bailouts.

    that's also the reason bankers need VAST number of suckers voting in one of their boys obama-romney as president.

  5. #5

    Default

    Well, whenever the topic of derivatives, swaps, securities, etc comes up in the news its always followed with a statement to the effect of no one knows how much there really is and these devices are not regulated. So the simple truth is I donít think anyone knows what will happen during the next meltdown. One thing is for sure in my mind that when the collapse of Lehman spread to other banks and AIG, a lot of money was thrown at the Ďproblemsí to stop the bleeding. I think that if left alone it would have then collapsed the world economies and currencies. So, one has to wonder if the collapse of Lehman was only a test of that domino effect.

  6. #6

    Default Yes...absolutely

    Quote Originally Posted by Chump Change View Post
    Is it possible they could end up buying their own junk back in some sort of circular trading?
    Its also possible they scratch each other's backs (and make each other's markets).

    They collude, they gouge, they create false markets and attract unknowing buyers.
    Buy Gold and Silver, then wait.
    Gold, Silver: Beautiful Insurance in Ugly Situations
    Monetary triangle: U-Unit of Account, W-Store of Wealth, M-Medium of Exchange.
    PMs are unencumbered tangible fungible fractionable portable durable liquid insurance...without counter party risk; elementary, "Internet Safe" w/o tech issues.
    Silver cheaper than Gold, both precious !!
    Gold and Silver are elemental with no man-in-the-middle.

  7. #7

    Default

    Quote Originally Posted by HardlyPeeved View Post
    Its also possible they scratch each other's backs (and make each other's markets).

    They collude, they gouge, they create false markets and attract unknowing buyers.
    They extort bailouts from governments, threatening Mutual Assured Destruction (MAD), via their use of financial Weapons of Mass Destruction (derivatives).
    Legal Disclaimer: I am not a doctor, nor do I play one on TV.

    "It's tough to make predictions, especially about the future." -- Yogi Berra
    A variant of this has also been attributed to physicist Niels Bohr, and others.

    "Tis against some menís principle to pay interest, and seems against othersí interest to pay the principal." -- Benjamin Franklin

    The School of Hard Knocks is where you get the lesson after you fail the test.

    Book title: "The Best Way to Rob a Bank Is to Own One"

  8. #8

    Default

    Quote Originally Posted by Chump Change View Post
    Is it possible they could end up buying their own junk back in some sort of circular trading?
    That already happened to JPM Chase a few months back. I remember it being called "a derivative of a derivative".

  9. #9

    Default Derivs

    Let me step back a second and make sure everyone knows exactly what a derivative is. That might make it a little less scary.

    A derivative is a bet on an outcome based on some underlying event. Thats basically it. If you bet your buddy on a Sunday football game, you have just in effect created a derivative that is added to that $1000 Gazillion number. The word derivative is basically "deriving" the value from something.

    People (and banks) make bets all the time. Sometimes these bets are for events that never occur. For example the really scary sounding CDS is a Credit Default Swap. Lets say you are a rich guy and own a ton of Chesapeake stock (CHK). You are concerned that if they get a credit downgrade it could affect your portfolio. So you buy a credit default (or change) swap (I give you one thing you get something). The swap might be structured that you give a small (relative to your portfolio and the risk) payment every month in exchange for a big payment if CHK gets a downgrade.

    There are many other derivatives like stock options or basically betting where a stock price will be by a certain date. They are not all speculative, but can be depending on what you want to accomplish.

    So while I agree, there are a big number of derivatives out there, its not necessarily financial Armageddon or playing fast and loose with the market. Both sides want to profit so these are usually not made foolishly.
    -- The golden rule: He who has the gold, rules

  10. #10

    Default

    Quote Originally Posted by Karlus View Post
    Both sides want to profit so these are usually not made foolishly.
    Sadly that wasn't the case with AIG.

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