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Strategies & Market Trends : The coming US dollar crisis
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To: dybdahl who wrote (16010)1/4/2009 9:08:13 AM
From: Real Man  Read Replies (1) of 71463
 
* How many derivatives directly cancel out each other.

All of them, there is a counterparty to every contract

* How many derivatives are the form "We lend you money now and you'll pay us back"

None

* How many derivatives are of the form "The nominal sum is
huge, but the actual money being paid is almost zero"

Depends. If there is a default like Leh, 92% or so
had to be paid by CDS holders. When rates swaps finally
blow up, it will be bleeding like subprime - someone
will have to pay a lot every month, possibly 200% of
the notional value over the time of 30 years if things
really get bad.

* How many derivatives can be used as security against something else.

Their value can be used as a collateral for a loan.

* How many derivatives can fail without affecting anything.

None. Derivative failures affect credit spreads and volatility
directly, just as they helped to reduce the spreads and
volatility while the bubble was inflating.
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