"La pérdida de los 2000 millones de JP Morgan la semana pasada es una gota en el océano frente a su exposición de 70 billones. Los 9 bancos americanos más grandes tienen en conjunto una exposición de más de 200 billones de dólares. La exposición a los derivados de los 5 bancos más importantes son aproximadamente estos, según informacion oficial: JPMorgan Chase - $70.1 Trillion Citibank - $52.1 Trillion Bank of America - $50.1 Trillion Goldman Sachs - $44.2 Trillion (trillion es un billón en Europa). Nadie sabe bien lo que hay detrás de los derivados salvo el BIS en Suiza, que ya trata de buscar apaños contables para que los datos intenten encajar, que no encajan. En España no tenemos datos ni de los grandes ni de los pequeños.¡Ya me gustaría saberlos, principalmente de Santander y BBVA. Para tapar este agujero no les queda otra opción a las autoridades USA que la "flexibilizacion cuantitativa "(???) hasta el infinito...Nadie, en cualquier caso, quiere hablar de esto, porque da pánico. No quiero imaginar en lo que acabará el fenómeno", me dice el consejero delegado de una de las grandes gestores de fondos nacionales.
Derivatives: The Unregulated Global Casino for Banks
SHORT STORY: Pick something of value, make bets on the future value of "something", add contract & you have a derivative.
Banks make massive profits on derivatives, and when the bubble bursts chances are the tax payer will end up with the bill.
This visualizes the total coverage for derivatives (notional). Similar to insurance company's total coverage for all cars.
LONG STORY: A derivative is a legal bet (contract) that derives its value from another asset, such as the future or current value of oil, government bonds or anything else. Ex- A derivative buys you the option (but not obligation) to buy oil in 6 months for today's price/any agreed price, hoping that oil will cost more in future. (I'll bet you it'll cost more in 6 months). Derivative can also be used as insurance, betting that a loan will or won't default before a given date. So its a big betting system, like a Casino, but instead of betting on cards and roulette, you bet on future values and performance of practically anything that holds value. The system is not regulated what-so-ever, and you can buy a derivative on an existing derivative.
Most large banks try to prevent smaller investors from gaining access to the derivative market on the basis of there being too much risk. Deriv. market has blown a galactic bubble, just like the real estate bubble or stock market bubble (that's going on right now). Since there is literally no economist in the world that knows exactly how the derivative money flows or how the system works, while derivatives are traded in microseconds by computers, we really don't know what will trigger the crash, or when it will happen, but considering the global financial crisis this system is in for tough times, that will be catastrophic for the world financial system since the 9 largest banks shown below hold a total of $228.72 trillion in Derivatives - Approximately 3 times the entire world economy. No government in world has money for this bailout. Lets take a look at what banks have the biggest Derivative Exposures and what scandals they've been lately involved in. Derivative Data Source: ZeroHedge.
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One Hundred Dollars |
$100 - Most counterfeited money denomination in the world. Keeps the world moving. |
Ten Thousand Dollars |
$10,000 - Enough for a great vacation or to buy a used car. Approximately one year of work for the average human on earth. |
100 Million Dollars |
$100,000,000 - Plenty to go around for |
1 Billion Dollars |
$1,000,000,000 - This is how a billion dollars looks like. |
1 Trillion Dollars |
$1,000,000,000,000 - When they throw around the word "Trillion" like it is nothing, this is the reality of $1 trillion dollars. The square of pallets to the right is $10 billion dollars. 100x that and you have the tower of $1 trillion that is 465 feet tall (142 meters). |
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Bank of New York Mellon |
BNY has a derivative exposure of $1.375 Trillion dollars. |
State Street Financial |
State Street has a derivative exposure of $1.390 Trillion dollars. |
Morgan Stanley |
Morgan Stanley has a derivative exposure of $1.722 Trilion dollars. |
Wells Fargo |
Wells Fargo has a derivative exposure of $3.332 Trillion dollars. |
HSBC |
HSBC has a derivative exposure of $4.321 Trilion dollars. |
Goldman Sachs |
Goldman Sachs has a derivative exposure of $44.192 Trillion dollars. |
Bank of America |
Bank of America has a derivative exposure of $50.135 Trillion dollars. |
Citibank |
Citibank has a derivative exposure of $52.102 Trillion dollars. |
JP Morgan Chase (JPM) |
JP Morgan Chase has a derivative exposure of $70.151 Trillion dollars. |
9 Biggest Banks' Derivative Exposure - $228.72 Trillion |
Note the little man standing in front of white house. The little worm next to lastfootball field is a truck with $2 billion dollars. |