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516 TRILLION in derivitaves!

Profile picture for Aldreth
Contributions: 4233
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Since August 2009

http://www.bloomberg.com/apps/news?pid=20601087&sid=aM.Dn6UPbtfs&refer=home


Derivatives Grow at Fastest Pace in Nine Years to $516 Trillion

"Nov. 22 (Bloomberg) -- The market for derivatives grew at the fastest pace in at least nine years to $516 trillion during the first half of 2007, the Bank for International Settlements said."

"Derivatives of debt, currencies, commodities, stocks and interest rates rose 25 percent from the previous six months, the biggest jump since the BIS began compiling the data."

"Investors have been turning to credit derivatives as a way to speculate on a growing risk of defaults amid record U.S. mortgage foreclosures. The Markit CDX North American Index of credit-default swaps on 125 investment-grade rated companies has almost tripled since February to 90 basis points from 33."
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November 21 2007 - US

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Profile picture for fillm0re
Contributions: 116
im glad i was only required to take one semester of calculus in college.
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November 21 2007
Profile picture for Joe Spake
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I only have one word to summarize this: GREED.
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November 21 2007
Profile picture for . . .
Contributions: 3391
Deriviatives are a form of insurance, or sharing someone else's risk.

Not something I want to do; but it is better odds than Los Vagas, and it helps out those that took too much risk and need help.
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November 21 2007
Profile picture for azrob
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Only a very small fraction, possibly less then 1% of the derivative market was used to insure known risks; Most of the rest was used for speculative purposes...

There isn't 516 trillion of risk to insure anywhere, so saying it all is inusurance makes utterly no sense to anyone with any understaning of econ and finance.
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November 21 2007
Profile picture for Aldreth
Contributions: 4233
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25% in 6 months was very shocking to me. The sheer amount of debt boggles my mind.
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November 21 2007
Profile picture for BuyEqualsRent
Contributions: 1492
What's a 1,000 trillion, a quintillion?

The big problem a lot of the big houses are having right now is they bought insurance and then made risky bets. When they went to go collect on the insurance, the insurer says "sorry, my asset/policy ratio is out of whack, I can't cover you" and the AAA rated insured asset becomes trash.
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November 21 2007
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Contributions: 3391
quadrillion. 1000 quadrilliion is a quintillion.
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November 21 2007
 

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