Derivatives: Darth Vader's Revenge
An SI Board Since August 1998
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Emcee:  Worswick Type:  Unmoderated
According to informed sources as of March of this year the Long TErm Credit Bank of Japan had approximately 50 trillion yen of derivative contracts $725 billion dollars as of the exhcange yen/dollar currency rates of August, 1998.

Now that LTCB is finally acknowledged to be broke what has happened to this exposure? Has $725 billion dollars gone to money heaven?

One worries.

What does this portend for our own banks where all derivative contracts appear to be cross linked?

Is the global financial system about to be swamped with between $100 trillion and $500 trillion in unresolvable derivative contracts?

Where does one hide in this scenario?

According to the Federal Reserve Bank of New York...."activities in the 1996 annual reports of a sample of the largest, internationally active banks and securities firms in the G-10 countries, and notes improvements since 1993. The analysis builds, in part, upon a framework used by the Federal Reserve in analyzing the trading and derivatives disclosures of major U.S. banking organizations.

In total, 79 major banks and securities firms in the G-10 countries comprised the sample reviewed for the 1993-1996 period, representing over $14 trillion in total assets and over $83 trillion in notional amounts of derivative instruments. Disclosures in the 1995 and 1996 annual reports of a major securities firm in Hong Kong were also reviewed.

The analysis revealed that there have been general improvements as well as voluntary innovations in the annual report disclosures of a number of the surveyed firms. In particular, there were notable improvements in quantitative disclosures about market risk in 1996 and 1995. However, despite encouraging advances in disclosure practices by a number of institutions in the G-10 countries, many institutions continued to disclose very little about their trading and derivatives activities".

Please See:

...for the full text of the 37 page report and the abstract.

Personally, I am worried about this.

I am surprised that a discussion of one of the most pressing questions of our time.... has not been addressed sooner.

Thanks for your consideration and, I hope, interest.

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2500An occasional story here and there are OK and those that are ok are getting rareggersh-August 31
2499When has "Tyler Durden" every been "good"? And more to the Sam2August 30
2498It ain't good Message 29693282ggersh1August 30
2497Wrecking an Economy Means Never Having to Say You're Sorry Sam1August 24
2496[Video] Back to derivatives Janet Tavakoli on the return of the complex financiaxial1August 20
2495 SundayReview| EDITORIALToo Big to Regulate By THE EDITORIAL BOARDAggersh-August 11
2494Thanks for the update..the following may have been covered over the years; but (see clearly now-August 7
2493.... posted without comment.... Best to you all, Clark Congress Never Fixed tWorswick4August 7
2492The problem is the "guarantee" of greater returns, not so much in retggersh-July 30
2491This is sort of a silly question. Institutions that hold other people's moneSam-July 30
2490 28
2489So, if you borrowed today and the bond market crashes tomorrow, rates will soar.The Ox1July 9
2488Dodge... investmentresearchdynamics.comggersh-July 9
2487Isn't it wise for corporations to borrow as much as they think reasonable whThe Ox-July 7
2486This has gotten to be the morning "funny papers" Sam. From Rick AckeWorswick1July 7
2485BNP gets a pretty big fine, but not nearly as large as a couple of US banks. StSam1July 1
2484A good reminder that energy forecasts are often wildly wrong Updated bySam1May 31
2483The Size Of The Derivatives Bubble Hanging Over The Global Economy Hits A RecordWorswick-May 31
2482As My nephew said " that's a very simple explanation of how you can drasee clearly now-May 20
2481The $192 Trillion Ticking Time Bomb Phoenix Capital Research on 05/19/2014 Worswick2May 19
2480Ah, ever once and a while clarity comes along. Not often, but sometimes. ... Worswick1May 17
2479Top Clinton Aides Blew a Chance to Avert the Financial Crisis By Peter Coy andSam2May 3
2478Longish, but very good piece on why federal prosecutions of white collar crime hSam-April 30
2477we all know that she won't be prosecuted for her actions. Too many skeletonsteevee2April 11
2476This brought a little smile to my face when I read it.. But, we all know that Hawkmoon2April 11
2475post from another thread: Matt Taibbi was on John Stewart last night with his Sam1April 10
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