|
|
"A comprehensive, collaborative elections resource."
|
The $700 trillion elephant
|
|---|
| Parent(s) |
Issue
|
| Contributor | particleman |
| Last Edited | particleman Mar 16, 2009 11:39pm |
| Logged |
0
|
| Category | Commentary |
| News Date | Saturday, March 7, 2009 05:00:00 AM UTC0:0 |
| Description | There's a $700 trillion elephant in the room and it's time we found out how much it really weighs on the economy. Derivative contracts total about three-quarters of a quadrillion dollars in "notional" amounts, according to the Bank for International Settlements. These contracts are tallied in notional values because no one really can say how much they are worth.
But valuing them correctly is exactly what we should be doing because these comprise the viral disease that has infected the financial markets and the economies of the world.
Few know what derivatives are worth. I spoke with one derivatives trader who manages billions of dollars and she said she couldn't even value her portfolio because "no one knows anymore who is on the other side of the trade."
We need to identify and determine the real value of derivatives before we give banks and institutions a pass-go with more tax dollars. Otherwise, homeowners will suffer as banks patch up the holes left in their balance sheets by the derivatives gone poof; new credit won't be extended until the raff of the old credit is put behind.
It isn't the housing market devaluation, or the sub-prime mortgage market defaults that have us in real trouble. Those are nice fakes to sway attention away from the place where greed truly flourished -- trading phony instruments to the tune of $700 trillion. |
| Share |
|
|
2¢
|
|
| Article | Read Full Article |
|
| Date |
Category |
Headline |
Article |
Contributor |
|
|
