Global Derivatives: $1.5 Quadrillion Time Bomb
When investing becomes gambling, bad endings follow. The next credit crunch could make 2008-09 look mild by comparison. Bank of International Settlements(BIS) data show around $700 trillion in global derivatives.
Along with credit default swaps and other exotic instruments, the total notional derivatives value is about $1.5 quadrillion – about 20% more than in 2008, beyond what anyone can conceive, let alone control if unexpected turmoil strikes.
The late Bob Chapman predicted it. So does Paul Craig Roberts. It could “destroy Western civilization,” he believes. Financial deregulation turned Wall Street into a casino with no rules except unrestrained making money. Catastrophic failure awaits. It’s just a matter of time.
Ellen Brown calls the “derivatives casino…a last-ditch attempt to prop up a private pyramid scheme” – slowly crumbling under its own weight.
For years, Warren Buffett called derivatives “financial time bombs” – for economies and ordinary people.
Unless collateralized or guaranteed, their worth depends on the creditworthiness of counter-parties. Earnings on derivatives are “wildly overstated,” Buffett explains – because they’re “based on estimates whose inaccuracy may not be exposed for many years.”
When corporate bosses ask financial executives how profits look in any quarter, they, in turn, ask how much do you want, then manipulate things to oblige when told.
Since 2008, too-big-to-fail banks consolidated to much greater size than ever. They’re financial and political powerhouses controlling world economies to their own advantage.
