Tuesday, June 5, 2012

647,762,000,000,000 Reasons To Worry: The Derivatives Time Bomb

When it comes to the troubling economic situation that the world is facing today, we are almost daily inundated with reports about  "Austerity Measures" taking place in Europe to prevent member nations of the European Union collapse, and possibly leave the IMF Rothschild controlled union itself.  And of course, we are now getting news of more "Quantitative Easing" needed in America to prevent the crooked and criminal banks from collapsing.   The economic news everywhere is not good, and the thought of a world wide economic collapse is becoming closer to reality every day!

But one huge monster that everyone in our financial institutions tries to avoid talking about is of course the multi-Quadrillion dollar Derivatives time bomb that could eventually bring about that world wide economic collapse that nations all dread.   It is surprising that few people are even aware of Derivatives and how deadly the situation truly is becoming...

To again show everyone exactly how dangerous Derivatives have truly become, I want to present the following interesting article that comes from a website called "Shenandoah" at www.johngaltfla.wordpress.com, entitled: "647,762,000,000,000 Reasons To Worry: The Derivatives Time Bomb", for everyone to view for themselves right here.  I do of course have my own comments and thoughts to follow:

647,762,000,000,000 Reasons to Worry: The Derivatives Time Bomb

by John Galt
June 3, 2012 19:10 ET

The hits just keep coming and with $647 trillion reasons to worry, aka, the total notional derivatives now outstanding as of Q4 in 2011 per the Bank of International Settlements just released this afternoon and published officially on Monday (click here for the PDF of the full report).  The really, really good news is that our Federal Reserve has this completely under control and the trillions of dollars in Credit Default Swaps (CDS) and European Interest Rate Swaps will as always settle without concern.


Of course the problem is that as one can see in the graph above, the amount of Gross Credit Exposure has returned to 2008 levels, something the world might want to pay attention to. Once the lessons of the mistakes of the past are ignored, the risk factor increases proportionally and with Europe teetering on the edge of a Lehman event, the increase in interest rate derivatives might well indicate a new risk that has not been accounted for:

A sudden collapse of the Euro currency below the 1.20 or even parity level.

Such an event would make Lehman look like a picnic but there is more bad news beyond that as it is not just interest rate derivatives that have increased past 2008 levels as the chart above demonstrates, but some idiots placed bets on the currency markets which means that a collapse of the Euro creates an irreversible game of dominoes and destruction:

The good news is that the $23.235 trillion in Euro derivatives is down from Q3 to Q4 2011. The bad news is that since Dec 1, 2011, the Euro has plummeted in value:

Unfortunately for us common folk, no one has taken the time to explain the implications of a 10, 20, or even 30% decline in the value of the Euro versus the US Dollar in a compressed time period. This is one warning sign of many from the report but the other one is more mundane and ties to the Federal Reserve’s mandate, er, unwritten mandate to support the U.S. equity markets by laundering money through its member banks to purchase stocks and give the illusion of a strong economy.

Why do they need to do that?

This means that over $4 trillion are tied up in derivative contracts of every sort in the European and U.S. equity markets. Granted, this is the “notional” total but nobody has ever run a scenario, at least publicly, of what would occur when the major equity markets of the world collapsed at a 20% pace along with a credit event, aka Greek withdrawal from the Eurozone, and an economic slowdown in the Western world. This could indeed mean the worst is still ahead and the report also highlighted a major point as the Financial Times reported tonight:

Cross-border lending falls sharply

(Click on the link above to read in full; registration required)

Excerpted from the above article by Norma Cohen:

Data from the Bank for International Settlements due to be released on Monday shows aggregate cross-border claims, generally loans, of banks fell sharply, seeing a drop of $799bn from levels of the previous quarter, amounting to 2.5 per cent of lending.

Within that, the biggest drop came from lending to other banks which fell by $637bn, or 3.1 per cent.

Cross-border lending to banks in the eurozone periphery continued to contract sharply – commitments to Greece, Ireland, Italy, Portugal and Spain dropped substantially.

This means that the world is turning to the Bank of England which needs to reflate again to save the British economy which is flailing, the Japanese Central Bank which is trying to decontaminate a deflationary economic disaster expanded by the tsunami and Fukushima disaster, and the United States Federal Reserve which has no clue of a what course of action to take to prevent a short term sharp recession. Thus the logical conclusion is that the people who made the mess in 2008 and are supposed to fix this problem in 2012 still have no clue whatsoever for a solution to the problems in Europe and around the world.

Got gold?

NTS Notes:  What everyone must be aware of is that this 647+ Trillion dollar figure as presented in this article is actually a very low estimate on how huge the Derivatives time bomb is.   Some more realistic figures put the amount at actually closer to 1.5 QUADRILLION dollars!

Again, I am truly shocked that the general public is truly unaware of the Derivatives time bomb, and I have long noticed that the so called "economic" talking heads that flood the Jewish controlled mainstream media avoid this like a plague.   I have long suspected that is by design.  It seems to these crooks that the less the public knows about the truth, the better for them....

The real danger is that this Derivatives time bomb is absolutely not being tackled by either governments or financial institutions.  Because of their continuing careless spending practices and their allowances for more hedging and betting on Derivatives markets, that "647 Trillion dollar " (or again some estimates at 1.5 Quadrillion dollar value of outstanding Derivatives will not go away, but only grow to be even more out of control!

In my honest opinion, what needs to be done is to stop bailing out these crooked financial institutions by putting the burden on the general public, and let them fail.    The effects on the world economy would be painful for a short while, but the world would eventually recover.  Honestly,  Is there any other alternative?

More to come



Citizenfitz said...

"The effects on the world economy would be painful for a short while, but the world would eventually recover. Honestly, Is there any other alternative?"

Good one, NTS. At this point in time it's as if the world is acting out the pages from a script.

We shuffle down the paved road to Armageddon, each following the guy in front of them.

Mouser said...


Today's Image at Snipits and Snapits (five monkeys making chalkmark bundles on the wall)

"It's the board of directors of the financial arm of the NWO (i.e. the FED, ECB, BIS, IMF etc) trying to figure out how many trillions they need to print/create to cover the derivatives their greedy minions caused to enable them to keep the international central bank ponzi scheme afloat a little longer (grin)."


I think that's Bernanke second from the left, but I don't see Lagaard - perhaps she went out for cake...