How Unelected Regulators Unleashed the Derivatives Monster – and How It Might Be Tamed
Posted by freedomforall 8 months, 3 weeks ago to Politics
Excerpt:
"While the world is absorbed in the U.S. election drama, the derivatives time bomb continues to tick menacingly backstage. No one knows the actual size of the derivatives market, since a major portion of it is traded over-the-counter, hidden in off-balance-sheet special purpose vehicles. However, when Warren Buffet famously labeled derivatives “financial weapons of mass destruction” in 2002, its “notional value” was estimated at $56 trillion. Twenty years later, the Bank for International Settlements estimated that value at $610 trillion. And financial commentators have put it as high as $2.3 quadrillion or even $3.7 quadrillion, far exceeding global GDP, which was about $100 trillion in 2022. A quadrillion is 1,000 trillion.
Most of this casino is run through the same banks that hold our deposits for safekeeping. Derivatives are sold as “insurance” against risk, but they actually add a heavy layer of risk because the market is so interconnected that any failure can have a domino effect. Most of the banks involved are also designated “too big to fail,” which means we the people will be bailing them out if they do fail.
Derivatives are considered so risky that the Bankruptcy Act of 2005 and the Uniform Commercial Code grant them (along with repo trades) “super-priority” in bankruptcy. That means if a bank goes bankrupt, derivative and repo claims are settled first, drawing from the same pool of liquidity that holds our deposits. (See David Rogers Webb’s The Great Taking and my earlier articles here and here.) A derivatives crisis could easily vacuum up that pool, leaving nothing for us as depositors — or for the “secured” creditors who are junior to derivative and repo claimants in bankruptcy, including state and local governments. "
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D.C. is utterly corrupt and can't be reformed.
NIFO
"While the world is absorbed in the U.S. election drama, the derivatives time bomb continues to tick menacingly backstage. No one knows the actual size of the derivatives market, since a major portion of it is traded over-the-counter, hidden in off-balance-sheet special purpose vehicles. However, when Warren Buffet famously labeled derivatives “financial weapons of mass destruction” in 2002, its “notional value” was estimated at $56 trillion. Twenty years later, the Bank for International Settlements estimated that value at $610 trillion. And financial commentators have put it as high as $2.3 quadrillion or even $3.7 quadrillion, far exceeding global GDP, which was about $100 trillion in 2022. A quadrillion is 1,000 trillion.
Most of this casino is run through the same banks that hold our deposits for safekeeping. Derivatives are sold as “insurance” against risk, but they actually add a heavy layer of risk because the market is so interconnected that any failure can have a domino effect. Most of the banks involved are also designated “too big to fail,” which means we the people will be bailing them out if they do fail.
Derivatives are considered so risky that the Bankruptcy Act of 2005 and the Uniform Commercial Code grant them (along with repo trades) “super-priority” in bankruptcy. That means if a bank goes bankrupt, derivative and repo claims are settled first, drawing from the same pool of liquidity that holds our deposits. (See David Rogers Webb’s The Great Taking and my earlier articles here and here.) A derivatives crisis could easily vacuum up that pool, leaving nothing for us as depositors — or for the “secured” creditors who are junior to derivative and repo claimants in bankruptcy, including state and local governments. "
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D.C. is utterly corrupt and can't be reformed.
NIFO
As the old saying goes "If you can't hold it in your hand, do you really own it?"
Note that government and its agencies made that rule.
How would the market make the rankings?
Surely, anything that complex would rank low. Intuition and custom, that widows and orphans, bread and butter would rank top seems to me to the right approach here at least.
Yes, I notice that today when the DOW stock market values have dropped 2.5% and the Wall St media are panicked,
the price of paper silver that Wall St uses to suppress actual silver's value is down more than 4%.
Gold is down less than 1%.
Without the 'paper silver/gold' market to manipulate the prices both gold and silver would probably be increasing
today as people move out of shares, out of FRNs, and into something that holds value over time.
No doubt Wall St thieves are taking long positions at lower prices in AU and AG.
Kind of like our sovereign debt.
Other countries see this country for exactly what it is: an empty bag of promises.
Every country that holds our debt in the form of bonds and/or dollars is slowly but surely getting the hell out.
The fact that oil on the international market is now sold in all major currencies (ah, hem.. BRICS, Wan, Rubles..et.el.) means the US hegemony in the Petro dollar is all over kids.
Gather up your marbles while you can.
Futures were designed, originally, to give cash to farmers in advance of their crops. It quickly became a way to screw them. NOTICE that the price of CORN is not that much higher in the futures world than it was 20 years ago... How is that? (Manipulation).
But what do you pay for Corn in the store?
once the system was in place. The farmers are forced to play along, and they are forced, in many situations, to sell their futures WHEN OTHER FARMERS need to sell. Creating a great opportunity for the future consumers to buy low.
Then the speculators come in.
Then the biggest speculators come in.
Then they fail. And the system DOES BACK FLIPS to unwind their losing trades.
So, it's a rigged system. I got out of the "trading" game when I realized that the bigger fish had such visibility into the system, they could calculate the profits of stopping everyone out, but dropping the market quickly, and then buying it all back up.
Yeah, a few Flash Crashes happened, too... But overall. These guys cleaned up. Especially in Gold and Silver. Highly rigged markets.
Stealing from the middle class. Giving to the banksters!
voters??
screw them as they have always done
control over the people could have been seriously reduced, and the communist regimes of Obama
and Buydem might never have been able to occur.
I couldn't agree more with your statement, jb.
Declare the Federal Reserve Act unconstitutional, seize all bankster assets -stolen by the banksters
under that unconscionable law, and prosecute every federal employee, lobbyist, consultant that
have participated in the conspiracy, including all retired personnel and former con-gresspersons.
All laws passed by the traitors should be declared void and without any force.
NIFO