The derivatives and other exotic instruments

[moniss]

will be affected by this market slide and looming recession/depression. But it is little discussed now. But remember how it all of a sudden became a big topic under the crash of W? Well here are some things from the latest quarterly report for the Fourth Quarter of 2024 from the Office of The Comptroller of the Currency. First it is important to note that "notional" value is not necessarily a total hard value. You can read up on the discussion/disagreements about notional versus other measures but suffice it to say the other estimates of potential financial obligation from derivatives is orders of magnitude higher. Here is a link from Investopedia about some of the estimates that go as high a 1 quad-trillion dollars of exposure.

Derivatives are used in many things but the big majority are in interest rate products and the report notes:

"derivative contracts remained concentrated in interest rate products, which totaled $125.9 trillion or 67.5 percent of total derivative notional amounts"

It is also important to note from the report:

"four large banks held 86.5 percent of the total banking industry notional amount of derivatives"

Remember how in 2006 and on when people were getting alarmed about excessive risk? Remember how we were told it was silly to think it could go bad? Until it did go bad and then they looked for scapegoats like claiming minorities borrowed too much money and didn't pay it back. Remember the massive bailouts of the banks? Golly Mr. Peabody I never even heard of a quad-trillion!!!

Since that time many of the same architects of that financial mess and bailout have worked to construct their new "can't fail" system and they regularly tell us that any concern is silly. But does it really hold water in the face of massive decline in stock values, bond prices sliding and a major trade war started by the country holding these risk instruments? It'll all be OK. They said so.

https://www.investopedia.com/ask/answers/052715/how-big-derivatives-market.asp

https://www.occ.gov/publications-and-resources/publications/quarterly-report-on-bank-trading-and-derivatives-activities/files/q4-2024-derivatives-quarterly.html

[markodochartaigh]

1. It turns out too, that the Fed bailed out

foreign banks as well as US banks.

[Woodycall]

3. Inside Job...

...The film that cost over $20,000,000,000,000 to make...

[markodochartaigh]

7. Clever way of

putting it!

[Woodycall]

9. Inside Job - (2010 - Full Documentary Movie)

[moniss]

6. Yes the Fed repo action has been off the charts for a long time now

and it's like trying to pour enough water into a bucket with holes to keep it at a certain level while more and more holes get punched in the bottom. The moves in bonds are also making it more and more difficult to maintain desired balance and control and the Fed ends up in the position of needing huge amounts more but the debt ceiling is here and the more you run the printing press now will impact the devaluing of the dollar. So it ends up like a dog chasing it's tail.

You can't push cuts in interest rates, as Crumb the 1st is doing, as a solution because it only increases the pressure for more dollars in light of a devaluing dollar. That's one reason why in a floating currency valuation environment you see countries make the mistake of pumping currency into the system to make up for falling valuation and then the only way to "dry things up" and strengthen the currency again is to have huge interest rates.

[Woodycall]

2. Until...

...we start to treat "financial criminals" the same way treat the guy who breaks into our garage and steals an air compressor, nothing, NOTHING! Will be right...

[Old Crank]

4. Life sentence for every million stolen.

First five consecutive.


I've been saying this for years about bank and corporate crime. Fines are just a cost of doing business.

[markodochartaigh]

8. "If a fine is the only penalty,

then the law only exists for the lower class."

[Old Crank]

5. Still scarry

With the administration flailing around.

His policies have really impacted our retirement accounts already.