Five Banks Account For 96% Of The $250 Trillion In Outstanding US Derivative Exposure

Here's a kick in the assets for ya!

Five Banks Account For 96% Of The $250 Trillion In Outstanding US Derivative Exposure; Is Morgan Stanley Sitting On An FX Derivative Time Bomb?

Talk about following the money....

someone want to detail this in lamens terms please?

Originally posted by thegoods724
someone want to detail this in lamens terms please?

Im no expert, but I tried to figure this out by reading definitions on Google etc.

I think derivatives mean risky business in the money world. Short term risky investments that can potentially make a lot of money. But I guess could also cost you a lot of money... and whose money you ask? Well, do you use a bank?

What gets me are the numbers... I mean wtf! Back in mid 2009 the amount of derivatives was calculated to around 555 billions. Which was a 37% increase from 2007. Look at that number now?!?! 333 trillion when looking at the top 25 banks.
Inspite of crisis, insolvent small time businesses, and people being forced out of their houses, the banks have managed to increase the risky investments by 60000% since 2009.

Now THAT is a kick in the assets and totally unacceptable.

72 trillion in exposure by JPM... imagine if anyone manages to prove that those money doesn't even exist... it's merely figures on a piece of paper. There's no such thing as too big to fail... there is however still "The bigger they are the harder they fall" and unfortunately a lot of people are going to get hurt.

My hope is that politicians stop being corporate shills after this episode and begin to put limitations on banks and especially on the FED. In reality the FED should not be allowed to demand interest off the money it prints. It should be forced into becoming a company that rests entirely in itself, end of story.

Originally posted by thegoods724
someone want to detail this in lamens terms please?

the republicans have tried to introduce legislation eliminating regulations on it. most americans think it has gone away

it has not

That is utterly insane... you can't keep inventing money without consequences. This is nothing more that governmentally approved counterfeiting!

Derivatives (Calculus):
en.wikipedia.org...

In calculus, a branch of mathematics, the derivative is a measure of how a function changes as its input changes. Loosely speaking, a derivative can be thought of as how much one quantity is changing in response to changes in some other quantity; for example, the derivative of the position of a moving object with respect to time is the object's instantaneous velocity.

The derivative of a function at a chosen input value describes the best linear approximation of the function near that input value. For a real-valued function of a single real variable, the derivative at a point equals the slope of the tangent line to the graph of the function at that point. In higher dimensions, the derivative of a function at a point is a linear transformation called the linearization.[1] A closely related notion is the differential of a function. The process of finding a derivative is called differentiation.

Derivatives market
en.wikipedia.org...

The derivatives market is the financial market for derivatives, financial instruments like futures contracts or options, which are derived from other forms of assets.

The market can be divided into two, that for exchange-traded derivatives and that for over-the-counter derivatives. The legal nature of these products is very different as well as the way they are traded, though many market participants are active in both.

Derivative (finance)
en.wikipedia.org...

A derivative instrument is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties.[1][2]

One of the oldest derivatives is rice futures, which have been traded on the Dojima Rice Exchange since the eighteenth century.[3] Derivatives are broadly categorized by the relationship between the underlying asset and the derivative (e.g., forward, option, swap); the type of underlying asset (e.g., equity derivatives, foreign exchange derivatives, interest rate derivatives, commodity derivatives, or credit derivatives); the market in which they trade (e.g., exchange-traded or over-the-counter); and their pay-off profile.

Derivatives can be used for speculating purposes ("bets") or to hedge ("insurance"). For example, a speculator may sell deep in-the-money naked calls on a stock, expecting the stock price to plummet, but exposing himself to potentially unlimited losses. Very commonly, companies buy currency forwards in order to limit losses due to fluctuations in the exchange rate of two currencies.

They are really just trading formulas based on the varying rates of change.

the F1 (or F prime) rate of change would be like calculating the rate an object is falling through space until it hits terminal velovity.

The F2 (double prime) would be the rate of change, of the rate of change.

Fn (n = 3,4,5,6 . . .) rates of rates of change.

So in the derivatives market there would be boards trading F1 and another board trading F2.

This poses a problem as all the markets past F1 would be completely dependent on the performance F1 which spells disaster once growth (ie rates of change) stops or moves negative.

The Fn exacerbate the problem by magnifying the effects of a change in F1.

Complete insanity . . .

In my state, JP Morgan funds the food stamp cards.
I wonder how much of a kick back they're getting for every one that's issued. I just read that Oregon just received $5 mil for dispensing food stamp cards.
www.judicialwatch.org...

reply to post by flice


The U.S can legally print its own currency. the problem is that the Fed is printing like theres no tomorrow( which may be true ).

The other problem is that we have become beholden to banks in every way that matters. Banks have A LOT of money right now, but they still aren't lending,

there are many reasons why we're going to hell in a hand basket. re-enact glass steagall, and appeal the dodd-frank act, among many other things. you all might want to take a look at newts website... some interesting plans he has there

Since we are on the topic of banks and how they invest their customers money... What in Gods name evre happened to the BANKS PAYING THE ACCOUNT HOLDERS??? I remember way back when that a bank actually PAID YOU interest to hold, and hence use, your money.

The way things are being run toady....It's insane!

"Derivative" in laymen terms:

The actual word has nothing to do with financial anything (it's originally a calculus variable function and nothing more), but was adopted by the market industry many moons ago as the catchall word of the day to describe, in a nutshell, "gambling".

It refers to the gambling of what may or may not be the eventual outcome and/or future value of an intangible asset(s). Intangible assets only exist in numbers and are set at a fair market value, they have no actual physicalness to them (ie: stocks, goodwill, interest rates, market indexes, currencies, etc).

No matter how many times these market analysts try to say it has nothing to do with gambling, they're full of crap. It's basically hedge betting on future risk assessment... risks that originate from the very entity that defines gambling - the stock market backed by nothing, interest rates backed by nothing, fiat currency backed by nothing, etc.

Lay your bet on the table and see if you can make some money from it... and as an added bonus, you get to put the monetary value of your bet onto the asset part of your balance sheet to increase your overall net worth. Woo hoo.

The entire industry is nothing but a glorified numbers game... and if it all crashed and came tumbling down, the only things of value at the end of the day would be the things that you can physically touch (food, a house, a precious metal, a pair of pants, a lollipop, a bottle of whiskey).

Just like when a company goes bankrupt, the only things worthy of monetary liquidity are their actual physical assets like machinery, equipment, buildings, furniture, etc (tangible assets)... You don't see the bank coming along and giving the company a few bucks for the value of any intangible assets they have sitting on the books.

And when an individual goes bankrupt, the creditors want your house, car, etc., and account for those things at a fair market value in order to calculate your overall net liability to them. Do you see them applying any kind of monetary value to your working skills (an intangible asset) that will enable you in the future to get a job ? No. They want physical things that they can sell and get cold hard cash for... now. Not some future risk assessment.

This derivative crap only works so long as the monetary market exists and works. It's a useless, catchall word that means absolutely nothing at the end of the day when the cookie crumbles.

$250 trillion dollars worth of derivative exposure ?

Yet another reason why the Glass-Steagall needs to be reenacted... these banks have run amok in the gambling game... oops, I mean derivative asset finance.

You guys gotta remember that Wall Street hires some of the best and brightest.

The result you are seeing here is that someone figured out how to make the most money off the crappiest investment they had with zero risk.

And this is the result of everyone jumping on the bandwagon and killing the goose that laid the golden egg.

What I don't understand is why the government isn't jumping all over this. This is a threat to national security. It certainly has the potential to destabilize the country in a nasty way. My only conclusion is that politicians are giant wimps that don't want to touch this. However they should.

The problem is, IMO, the average person is too intellectually lazy or is just plain ill equipped in economics and financials knowledge to understand it. It's like it is a big problem- yeah - but it is only written about in another language.

reply to post by grey580


Maybe - I was thinking about this - maybe they aren't equipped to.

Maybe our biggest mistake is making politics out to be a personality contest and not an intellectual one, or at least minimizing our respect for a person's knowlege and ability to think clearly and put things into context.

Like, for instance - ok - nothing happens outside the context of time on this Earth. No matter what your religion, we've all got to admit that THIS IS REALITY and we are all in this dimension and the problems are here too - and NOTHING happens outside the context of time. OK.

So the Republican debate last night - that was telling us something. Did you see how AVERAGE POLITICIANS were up there resorting to bickering over things - that while they matter - they don't matter MOST - they were the easy things - and they were bickering.

And everyone was judging "Well I don't like the way he acted. Did you hear the crowd boo him? Did you see him get agressive? I thought he remained calm!"

That stuff is EASY for us to judge. We all act. We all have people act towards us. We all judge personalities, every day. That is EASY so that's why we do it.

But what we have GOT to do is to start judging who knows WHAT is going on, and who has a clue, and who best understand COMPLEXITY.

Because we live in complex, not average times. We need politicians that can think with a good knowlege base about MANY disciplines and tie that all together so that we can GET SOME solutions and maybe even stand up and say OVER MY DEAD BODY if that's what it comes to.

And we've got this dumbing media circus saying "RON PAUL IS CRAZY he talks about the federal reserve" for what - 6 years? Everytime they mention is name? Have they MADE people think they will be labeled as crazy if they speak about the fed? Is that part of the problem? "I don't want to discuss that, or I might be like THOSE people, and THOSE PEOPLE are crazy"

We ARE a nation of individuals, and some of us are not stupid. We've GOT to think for ourselves, and somehow, we've GOT to get other people to think.