Non-Tech: Derivatives: Darth Vader's Revenge  
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Share This Board Moderated By: Worswick -- (Not Moderated) -- Started: 8/31/1998 12:53:00 PM  Revision History

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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2489So, if you borrowed today and the bond market crashes tomorrow, rates will soar.The Ox107/09/2014 12:54 PM
2488Dodge...  ggersh-07/09/2014 12:41 PM
2487Isn't it wise for corporations to borrow as much as they think reasonable whThe Ox-07/07/2014 10:38 AM
2486This has gotten to be the morning "funny papers" Sam. From Rick AckeWorswick107/07/2014 08:50 AM
2485BNP gets a pretty big fine, but not nearly as large as a couple of US banks. StSam-07/01/2014 09:43 PM
2484A good reminder that energy forecasts are often wildly wrong Updated bySam105/31/2014 12:14 PM
2483The Size Of The Derivatives Bubble Hanging Over The Global Economy Hits A RecordWorswick-05/31/2014 10:11 AM
2482As My nephew said " that's a very simple explanation of how you can drasee clearly now-05/20/2014 01:29 PM
2481The $192 Trillion Ticking Time Bomb Phoenix Capital Research on 05/19/2014 Worswick205/19/2014 02:50 PM
2480Ah, ever once and a while clarity comes along. Not often, but sometimes. ... Worswick105/17/2014 10:47 AM
2479Top Clinton Aides Blew a Chance to Avert the Financial Crisis By Peter Coy andSam205/03/2014 01:00 PM
2478Longish, but very good piece on why federal prosecutions of white collar crime hSam-04/30/2014 05:03 PM
2477we all know that she won't be prosecuted for her actions. Too many skeletonsteevee204/11/2014 08:52 AM
2476This brought a little smile to my face when I read it.. But, we all know that Hawkmoon204/11/2014 03:46 AM
2475post from another thread: Matt Taibbi was on John Stewart last night with his Sam104/10/2014 01:42 PM
2474Tough Swap Standards Drive Up Trade Costs 92-Fold By Matthew Leising Apr 10, Worswick-04/10/2014 08:58 AM
2473Duplicate deleted carranza2-04/08/2014 07:01 PM
2472I may not post, but I certainly spend time reading here. carranza2204/08/2014 07:01 PM
2471"...I did not see the forces of fragmentation and the opportunity for peoplteevee104/08/2014 09:19 AM
2470I hope and sincerely believe that over the long years of tracking a pathway throWorswick304/08/2014 09:08 AM
2469well, who knew? The Father Of High Speed Trading Speaks: "The Market We CWorswick-04/08/2014 08:28 AM
2468The following links suggest answers to many questions. Though not perfect, the maxial104/08/2014 04:05 AM
2467The Wall Street banksters and shysters not only own the White House, but hold mateevee204/07/2014 07:38 PM
2466Coincidentally today, this on The Big Picture, by Bill Black ... The 10 Lessonsaxial304/07/2014 06:19 PM
2465Not sure about current numbers, but after the '09 meltdown, the estimated deteevee-04/05/2014 11:16 AM
2464"Did any of these criminals go to the crow bar hotel?" Nope. Not one.axial204/04/2014 01:41 PM
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