Defaults now beginning to occur in a number of European cities prefigure what may end up being the largest financial bubble ever to burst – a bubble that today amounts to more than $600 trillion.
The Bank of International Settlements in Basel, Switzerland, now estimates derivatives – the complex bets financial institutions and sophisticated institutional investors make with one another on everything from commodities options to credit swaps – topped $604 trillion worldwide at the end of June 2009.
To comprehend the relative magnitude of derivative contracts globally, the CIA Factbook estimates the 2009 Gross Domestic Product, or GDP, of the world was just under $60 trillion.
Derivative contracts, therefore, have now reach a level 10 times world GDP, meaning even a 10 percent default in derivatives would equal world GDP.
CDO's are collateralized debt swaps. They are "bets" on debt obligations.
ReplyDeleteDerivatives are basically bets on the likelihood of repayment of debts.
The international bankers know full well that regular people cannot and will not be able to repay varying loans (personal, small business, student loans, etc) because the usury fees are simply too much of a burden. The bankers are betting on a collapse of credit - again.
Wake up folks.
I don't get if. If worldwide GDP is 60 trillion, where does 600 trillion come from?
ReplyDelete