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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Knighty Tin who wrote (10746)3/23/2004 5:29:46 PM
From: ild  Read Replies (1) of 110194
 
Date: Tue Mar 23 2004 15:34
trotsky (@derivatives) ID#377387:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
apparently the latest BIS estimate of the total notionals outstanding globally has now increased to $207 trillion, up $37 trillion from only ONE YEAR AGO. about 5 years ago the $100 trillion mark was breached for the first time.
derivatives are used to hedge risk, by spreading it around. however, they also invite the taking on of more risk than would normally be considered prudent, after all one can now 'hedge', so where's the harm?
it seems obvious that systmic risk overall has probably increased exponentially in recent years. rickety economic fundamentals support an ever larger financial economy that is marked by out-of-control growth rates in mainly debt and derivatives hedging the risk this debt poses.
i'm always having a good laugh when the blue-eyed polyanna's try to tell me that nothing CAN happen because so far, nothing HAS happened. that's approximately the position of the dinosaurs in the crustacean, upon being told that a meteor might hit the earth and wipe them out. 'how so', they say, 'can you show us it has happened before?'.
well, yes, the total wipeout has not yet happened. and that proves what?
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