Financial Weapons of Mass Destruction
I’m not an economist, but $700 trillion dollars sounds like a lot of money to me. These derivatives instruments are taking down giant corporations like AIG, Citi and many more. Warren Buffet called these instruments “weapons of financial mass destruction. So what are these derivatives?
The $700 trillion elephant
Commentary: Gargantuan derivatives market weighs on all other issues
By Thomas Kostigen, MarketWatch
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.
Credit Derivatives Dangers In 2008 & Beyond (A Primer)
by Daniel R. Amerman, CFA | May 2, 2008
The credit derivatives market is roughly 30 times the size of the subprime mortgage market – and potentially even more at risk in the coming years. In the previous article, The Subprime Crisis Is Just Starting, we explored the roots of the subprime crisis, demonstrated how mortgage securitizations work, and then used this knowledge to show why 2008 could be a much more dangerous year for the subprime mortgage markets – and the global financial system – than 2007. In this article, we show how the same fundamental – and quite human – motivations that created the subprime market crisis also imperil the $35 trillion global credit derivatives market.
The End of America As We Know It
Chuck lays out some of the financial problems in the US and world economy and dives into the types of derivatives a bit in this article.
Popularity: 2% [?]
