[Sosfbay-discuss] The Derivatives market is HUGE

[Gerry Gras]

This article talks about derivatives.  It may sound like
a boring subject, but I guess it is likely to be a hot
topic soon.

     http://www.commondreams.org/view/2008/09/22-10

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[From the article]

According to Marketwatch, the derivatives market is somewhere around 
$500 trillion. No, that's not a typo. That's trillion.

To put it in perspective, Marketwatch reminds us that the U.S. gross 
domestic product (GDP) is about $15 trillion. The GDP of all nations 
combined is approximately $50 trillion. The total value of all the real 
estate in the world is estimated at $75 trillion and the total value of 
all the world's stocks and bonds is about $100 trillion. But there's a
$500 trillion market in derivatives!

If you find this all confusing, we're in good company. Because "what we 
are witnessing is essentially the breakdown of our modern-day banking 
system, a complex of leveraged lending so hard to understand that 
Federal Reserve Chairman Ben Bernanke required a face-to-face refresher 
course from hedge fund managers in mid August," Bond fund giant Bill 
Gross told Marketwatch.

Marketwatch goes on to observe: "In short, not only Warren Buffett, but 
Gross, Bernanke, the Treasury Secretary Henry Paulson and the rest of 
America's leaders can't 'figure out' the world's $516 trillion derivatives."

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If I read that right, no one has a really good idea what will happen
next, except maybe Nader:

"Fleecing What's Left of the Treasury"

     http://www.commondreams.org/view/2008/09/22-3


...

It seems possible that if you hand out a blank check, the sccount
the blank check is on might get emptied.

On the other hand, I think it is probably true that if the government
does nothing, things could get pretty bad too.  What is needed is some
input from some really good experts, like John Kenneth Galbraith.
Oops, he is no longer with us.

Well, FWIW, here are a couple of articles from Bernie Sanders and Paul
Krugman:

    http://www.commondreams.org/view/2008/09/21-1

    http://www.commondreams.org/view/2008/09/21-2

Gerry