Global Meltdown Coming

Here is a summary of an article in the The International Forecaster

October 11 2008
International Forecaster Weekly

Summary: Derivatives at the heart of the crisis, catastrophic losses are inevitable, financial system headed for oblivion, the new world disorder, EU doomed, Credit Default Swaps at the heart of the problem, Plunge Protection Team history, coverups for globalization failures, Bloodbath for the Yen.

Derivatives are financial instruments whose values depend on the value of other underlying financial instruments. The main types of derivatives are futures, forwards, options and swaps.

The main use of derivatives is to reduce risk for one party. The diverse range of potential underlying assets and pay-off alternatives leads to a wide range of derivatives contracts available to be traded in the market. Derivatives can be based on different types of assets such as commodities, equities (stocks), residential mortgages, commercial real estate loans, bonds, interest rates, exchange rates, or indices (such as a stock market index, consumer price index (CPI) — see inflation derivatives — or even an index of weather conditions, or other derivatives). Their performance can determine both the amount and the timing of the pay-offs. Credit derivatives have become an increasingly large part of the derivative market.