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Derivatives: Darth Vader's Revenge
An SI Board Since August 1998
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2533 87 0
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 outstanding...eg. $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: ny.frb.org

...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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ReplyMessage PreviewFromRecsPosted
2533Sam I know it's been said before, but until we see bankers in jail there'axial5February 11
2532US Is Seeking Felony Pleas by Big Banks in Foreign Currency Inquiry Ben ProtesSam1February 11
2531Swissleaks Story: lemonde.fr Video: lemonde.fr Jimaxial2February 10
2530Good thing that no one is going to jail! What's a few billion between frienThe Ox1February 3
2529bloomberg.com (Bloomberg) -- Standard & Poor’s $1.5 billion settlement with The Ox-February 3
2528 In Push for Change, Finra Is Opposed by the Wall St. Firms It Regulates Sam-January 26
2527January 23, 2015 Doug Noland A long post from Doug Noland, who has been poundWorswick-January 25
2526Will Oil Price Crash Hit the Stock Market? An OPIS Article : The Blacteevee-January 20
2525 Goldman Sachs Pays Top U.K. Bankers Double That of U.S. Rivals By MichaelSam-12/31/2014
2524How long have we been speaking about this subject? SIXTEEN YEARS... + The BoWorswick-12/22/2014
2523Like these guys just haven't had enough time already to sell or spin off thSam212/19/2014
2522Business as usual.... huffingtonpost.com Sherrod Brown Criticizes Regulators Oggersh-11/21/2014
2521Credit Suisse ordered to pay $1.8 billion to finalize U.S. guilty plea REUTERS —Sam-11/21/2014
2520Their are witnesses, just no crime. -nfg- rollingstone.comggersh211/7/2014
2519$400 million is nothing to the banks....just another cost of doing their crookedteevee-11/7/2014
2518Like I said before, the big banks are just criminal enterprises. They don't Sam111/7/2014
2517JPMorgan Faces U.S. Criminal Probe Into Currency Trading By Hugh Son and MiSam-11/4/2014
2516 Shadow Banking Grows to $75 Trillion Industry, FSB Says By Ben Moshinsky Sam-10/31/2014
2515This big banks are just criminal enterprises. They don't fire guns and make Sam-10/31/2014
2514The Real Bailout Victims Sam-10/28/2014
2513Currency Wars Are Back: 'Export Your Deflation to Someone Else' By Sam110/22/2014
2512Here is Reuters' story on what Dudley said--it is surely indisputable that Sam110/21/2014
2511Tough talk from William Dudley to the banks. But I'm afraid talk alone won&#Sam-10/21/2014
2510ECB's bank stress tests dead on arrival telegraph.co.ukSam-10/20/2014
2509Banks Back Swap Contracts That Could Help Unwind Too-Big-to-Fail By GregorySam-10/13/2014
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