Tuesday, March 10, 2009

Outstanding Derivatives: 1.28 QUADRILLION-95% on MARGIN!

In an inflationary economy, big numbers quickly lose the shock factor.

Over the course of just a few years, a single banana becomes 10 times more expensive than what a four-bedroom home used to cost. A simple two-ply square of toilet paper sells for $417, while a full roll is priced at more than $140,000. And don’t even torture yourself by guessing how much a gallon of gas can go for under these conditions. The numbers get so big, not only do people stop trying to understand them, they begin to ignore them.

So it is alarming that the latest report from the Bank of International Settlements (bis) went largely unnoticed.

According to the bis, the number of outstanding derivative contracts in the global marketplace soared by double-digit percentages last year. Anything going up by double digits should elicit interest in and of itself, but in this case it is the sheer magnitude of the numbers involved that raises red flags.

The bis reported the total amount of outstanding derivatives has reached a practically incomprehensible $1.28 quadrillion. Yes, you read that correctly—quadrillion! And as astounding as this astronomically huge number is, the actual totals are even bigger because this number does not include derivatives related to the commodity markets (which the bis says it can’t track because values aren’t available).

A quadrillion dollars is hard to wrap your mind around. It takes a thousand trillion to make a quadrillion. Start with 1 million and multiply by 1,000, then multiply by 1,000 again, then multiple by 1,000 yet a gain—and then finally you get to 1 quadrillion. You can think of it as more than 92 times the value of all goods and services produced in America during 2007, or almost 20 times global gross domestic product.
According to DeMeritt, the majority of the $1.28 quadrillion in derivatives is “owned” on somewhere near 95 percent margin!

That has got to be “one of the scariest phenomena in economic history,” he says.

In case you are wondering, 95 percent margin means that for every dollar speculators have spent betting on derivatives, approximately 95 cents of that money was borrowed. For $5,000, a hedge fund speculator can control $100,000 worth of credit derivatives.


  1. I got a question for the blogger. The U.S. and Canadian unemployment rates are roughly the same at 7-8% The U.S. uses U1-U6 to measure unemployment. What does Canada use. I aske because the U.S would be at 19% using the Depression calculations. What would Canada be?

  2. What the CanadianGOv uses to calculate unemployement rates is very stupid very very stupid and so inacurate it beyond comprehension , Ok Statistics Canada calls up people of many postal codes asking what their employement status is , i know becasue i was recently part of this survey , they call you every week for 9 weeks straight, and this is how the calculate employement rates ladies and gentleman

  3. What the CanadianGOv uses to calculate unemployement rates is very stupid very very stupid and so inacurate it beyond comprehension , Ok Statistics Canada calls up people of many postal codes asking what their employement status is , i know becasue i was recently part of this survey , they call you every week for 9 weeks straight, and this is how the calculate employement rates ladies and gentleman

    That doesn't really answer my question. Did they do that in 1933 when unemployment in Canada was 27%? If they use that metric from 1933 what would unemployment be now. The U.S. uses U3 now and used U6 before which basically doubled their unemployment using U6.

    Blogger, that link didn't answer the question either. What I am trying to get at is in the US the "official" unemployment is 8.1% but using the measurements from 1932 the number is closer to 19%. By comparison, is Canada's 7.1% really like 14%. If so, where is the info on it. I can find U.S. info but can't find any Canadian historical changes to how unemployment measurements have changed.

  4. Mexico's unemeployment rate is 1 percent

    they include anyone over 14 years of age that works more than ONE hour a week EMPOLYED

    also what is the UNDERemployed rate of USA..people working less than full time because they got hours cut by 10-20%

  5. Financial weapons of mass destruction. Let all the unregulated bets fail, every single bailout to this point has been related to keeping this sham up, its time to stop this nonsense.

  6. Dang, I concur with the last poster. It is time to stop, time for all taxpayers to say that this is the end, time for all banks that couldn't make it through the first bailout to call it quits. Bottom line all taxpayers need to stop feeling the fear of what will happen if your financial institutition fails, and own up to the fact the we are in masse currently supporting financial institutions that "took us to the bank", financial institutions that have and will continue to not represent out interests. These big boys have been taking advantage of us for a long time, a lot of us decided that it was ok, because we knew that they held our pensions, 401k's, our futures. With the new found knowledge that our futures are quite compromised by the activities of our financial institutions, we are all more likely to bond together in order to demand equality.

    Otherwise all we will get is the continued raping of the middle class.

  7. I don't get it ...if the total re and stock mkt of the US is ABOUT 60T or so then how can the rest of the world get to 1.28Q ...there just isn't that much real assets floating around so it must mean funny money as in not real ...so if we let it all crash then we are only out the 5% ...I may come across as very naive but I don't get how to we can get to a number like 1.28 that has any backing other then smoke and mirrors ...

  8. Easy, when everything collapses, (since they are using only 5% as a down payment on the "loan"), the buyer must pay back the remainder of the 95%. Since that is impossible they all file for bankruptcy. This in turn collapses all banks, insurance companies,pensions fund and all monetary instruments.

  9. Calculating Canadian Unemployment:
    A. (Number of Unemployed / Number in Population 15 Years or Older) x 100

    B. (Number of Unemployed / Number in Labour Force) x 100

    C. (Number of Unemployed x 100)

    D. (Number of Unemployed / Number of Employed Workers) x 100

  10. UP YOURS, money makers !

  11. Please brother can you spare a dime please

  12. Thank you SO much for this excellent commentary. You got linked on SteveQuayle.com, which is a right-wing stockpiling site with nonetheless excellent daily news linkage. I also read the Mogambo Guru religiously over at the Daily Reckoning. I'm amazed at the shallowness of the mainstream discussion regarding this end of the world as we know it. Kudos on telling it like it is, and Keep Rockin' In The Free World! PEACE

  13. this will never happen, not even worth talking about it.

  14. Think about this way...

    Take a look at the face amount of all the insurance in the world! Yikes!! What happens if every person dies, and every building burns down, and every car crashes!

    Yikes! Oh where oh where will we get the money to pay for it.!!!!!!!!

    (..is that enough exclamations to meet your exacting standards?)


    It drives me nuts when I read such moronic posts like this one.

    Do you have any understanding at all about how this market works? Do you have any training or experience in finance or economics?

    Or is your intent solely to quote figures out of context with the goal of spreading fear an confusion?

  15. Previous poster, do some research on the shadow banking system (you can even use google, you can do that right?) and get back with us....

  16. there is a hole in the boat

  17. To the poster two posts earlier...

    You are a moron, commenting on things you don't understand.

    I'm an executive,(educated at Oxford in Pure Math) who actually works in a specialized sector of what is dramatically termed the "shadow banking" system. I understand exactly what has gone wrong with the system, and why the silly "quadrallion" figures you through around have no meaning.

    If you add up the face amount of all insurance in the world, I bet it would be far more than a quadrillion. Why don't you worry about that I wonder??? Because it is obviously a stupid and ridiculous thing to worry about.

    If a theatre is on fire and you yell "fire" you will save lives. But if it is NOT on fire and you yell "fire", then you will cost lives. I suggest that you leave the firefighting to those who know wtf they are doing.

  18. Previous poster, oh so since you went to Oxford and was brainwashed by Keynesian economics I should blindly accept whatever the heck you say? Since you claim to be part of the shadow banking system I must further understand that you accept the fiat currency system as constructed by the illegitimate Federal Reserve. A system that devalues everyone's labor by legislators defining the value of currency through manipulation of the credit markets. A commodity based monetary system is not subject to the whims of government agents and financiers. Hard work and labor of the average individual is devalued by manipulation of credit and currency, that is called a caste society with those who benefit being those who are closely tied to preferential government economic programs, i.e. the shadow banking system. We have both wealthfare for the rich and welfare for the poor in this country and neither benefits the middle class.

  19. The issue was the fearmongering out of context of the $1.28 quadrallion.

    You first implied that I didn't know about the "shadow banking system". Now, you launch onto a tangent about the fiat system.

    So apart from not being loved as a child, what is your basis for these hysterical rantings? Do you have a PhD in Economics? A former financial advisor to a Presidential administration?

    Do tell....

  20. Previous post: Umm no, lets not resort to mud slinging. I am a concerned citizen who has been educating himself about the economy. To me current "economic" theory has outpaced practical considerations. I have a science math background with a master's degree and I can see that inflation of the money supply is dilution of its value and is in reality a hidden tax. As I said before a commodity based currency as is spelled out in the constitution Article 1, Section 8: "The Congress shall have Power To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures"

    Obviously fiat currency is not legitimate according to this section, and as such Federal Reserve Notes are unconstitutional. Our founders were wise and they had experience several fiat currencies problems and crises. They included these provisions in the constitution in an effort to avoid all the problems that fiat currency causes. At the core of these problems today, is assuming that there will be constant growth in all economies of the world. Our system as constructed cannot survive is this assumption is invalid.

    If you are open minded enough I challenge you to watch this video series and make a consistent logical rebuttal to the author's thesis:


  21. John Maynard Keynes, the current hero of the Obama administration and Paul Krugman, had this to say about the Federal Reserve in 1920.

    “Should government refrain from regulation (taxation), the worthlessness of the money become apparent and the fraud can no longer be concealed. By this means government may secretly and unobserved, confiscate the wealth of the people and not one man in a million will detect the theft."

  22. It appears we have a major problem. It seems it has come from past manipulation of the market. Who wants the past to control what happens now!

  23. Anyone heard of the Kondratieff Wave?


    If these derivatives are like the futures market, there is no loan, there is no interest paid. A balance of 5% of value has to be maintained or the position is automatically liquidated.

  24. Whenever i see the post like your's i feel that there are still helpful people who share information for the help of others, it must be helpful for other's. thanx and good job.

    Finance Dissertation Proposal

  25. Great article about the coming depression.I read your article its very nice to read.I visit your site regularly.Thank you..


  26. I loveԁ aѕ muсh as yоu'll receive carried out right here. The sketch is attractive, your authored material stylish. nonetheless, you command get got an edginess over that you wish be delivering the following. unwell unquestionably come more formerly again as exactly the same nearly a lot often inside case you shield this hike.
    Also visit my webpage : chemietoilette

  27. I am extremely inspired together with your writing skills as smartly as with the
    structure on your weblog. Is that this a paid subject or did you modify it
    yourself? Anyway keep up the nice quality writing, it is rare to see a nice weblog
    like this one today..

    Here is my webpage; http://cha0vu19vi.bravejournal.com/entry/125415

  28. ӏ гeallу likе іt when folκs gеt togetheг and share ideas.
    Great ѕіte, κeеp it up!

    Feel free to surf to my page Chemietoilette

  29. Good day! This is my first visit to your blog! We are a grouρ of volunteers and staгting a nеw initiative in a
    cоmmunity іn the same nichе. Your blog provideԁ us valuable infοгmatіοn to ωоrk οn.

    You havе dоne a marvellous jоb!

    Stop bу my weblog ... Chemietoilette
    my website > http://www.evolution-trs.com

  30. I pay a quick visit every day some blogѕ and infоrmation sites tо rеad posts, but
    thiѕ webρаge presentѕ quality baseԁ contеnt.

    My web blοg :: http://www.mybuddiez.net/

  31. I wаs ablе to fіnd good іnformatіon frοm youг blоg ρosts.

    Feеl fгee to νisіt my pagе - herbsforhealthyliving.co.uk

  32. I waѕ аble tо finԁ good infоrmation frоm yοur blog posts.

    Loοk at my ωebpаge ... herbsforhealthyliving.co.uk
    My site - Chemietoilette

  33. I don't leave many remarks, but after browsing a few of the responses here "Outstanding Derivatives: 1.28 QUADRILLION-95% on MARGIN!". I do have a few questions for you if you tend not to mind. Is it just me or does it give the impression like some of the comments look like they are coming from brain dead folks? :-P And, if you are posting at other places, I'd like to κeep up with evеrything
    nеw уou hаve tο post. Coulԁ
    уοu post a list of аll of all уour shared ѕites lіκe your Facebook
    рage, tωіttег feeԁ, οr
    linkedin ρrofilе?

    Сheck out my web pagе; Chemietoilette

  34. Αweѕomе! Itѕ trulу awesome article, I
    have got much cleаr idea regardіng from this

    Heгe is my page ... Chemietoilette

  35. It is appropriate time to make some plans for the future and it's time to be happy. I've read this post and if I could I wish
    to suggest you few interesting things or tips. Perhaps you can write next
    articles referring to this article. I desire to read more things about it!

    Here is my page - seo india

  36. Hi there, I read your new stuff regularly. Your story-telling
    style is awesome, keep doing what you're doing!

    Review my web blog: akribos watches

  37. Very good blog post. I definitely appreciate this website.
    Stick with it!

    Feel free to surf to my webpage relic watch for men

  38. I wanted to thank you for this wonderful read!! I definitely loved every little bit of
    it. I've got you saved as a favorite to check out new stuff you post…

    Also visit my web page ... mens armitron watches

  39. Hello there, I found your web site by the use of Google even as searching for a comparable
    topic, your site came up, it appears good.
    I have bookmarked it in my google bookmarks.
    Hi there, simply turned into aware of your blog through Google, and found that
    it is truly informative. I'm gonna watch out for brussels. I will be grateful when you proceed this in future. Lots of people will be benefited out of your writing. Cheers!

    Feel free to surf to my web site - akribos xxiv watches for women

  40. You can use fabrіc pаіnts and they arе definitеly nothіng liκе the fгumpy stуleѕ you were forcеd tο wear as a child!
    The team of stylists whο put a celebrity togеther for а memento that each one shaгeѕ a ρart οf the
    industгy, connectіons with higheг-ups and some leads to future jobs.
    In fact, moѕt peοple whο havе
    multi cοlоr bгanding oг logo deѕigns.

    It wаѕ a delaуeԁ reaction to Protestantism.

    Check out my blоg - thoi trang cong so

  41. nice post, It really helps to improve your bad credit. we can make estimate from the outstanding derivatives , that how much time we have to wait and work for it. thanks for sharing it

  42. This comment has been removed by the author.

  43. Only a major credit card such as a Visa, Discover, American Express or MasterCard will really start building a history. The amount of time that is needed before a borrower will be approved for certain types of credit varies. ATT Credit Card

  44. These articles and blogs are certainly sufficient for me personally for a day. shiznit stocks

  45. This is an informative blog by which I have got that info which I really wanted to get. panic away

  46. This is very essential blog; it helped me a lot whatever you have provided.
    shortness of breath anxiety


Everyone is encouraged to participate with civilized comments.