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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 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
2681Six months since I've posted .... as the world turns When This Debt BubblWorswick2September 20
2680theautomaticearth.com The swamp that can’t be drained without causing explosionggersh-May 13
2679What could possibly go wrong here? uk.reuters.com U.S. SEC approves request toggersh4May 3
2678April 21, 2017 Gains, Pains Why the Big Banks Are Terrified of Le Pen Winning iWorswick4April 21
2677March 16, 2017 The Fed is Now Officially Screwed (the $555 Trillion Debt Bomb) Worswick2March 16
2676I must say having posted hundreds of times on this Blog since it's beginningWorswick-February 3
2675 U.S. banks must pay up to $2 bln more per year to shield Wall Street -Fed REUSam-12/15/2016
2674The dollar the now most fungible financial instrument ... for a bit anywhere ..Worswick110/16/2016
2673The twilight dance hour approaches? Deutsche Bank Tells Investors Not To WorWorswick110/9/2016
2672QE purchases near record even as doubts grow Although doubts over central banks’Sam-10/6/2016
2671Deutsche Bank ’s Problems Could Snowball... As Soon As Next Week! For the chartWorswick110/2/2016
2670 According To JPMorgan, This Is The Biggest Risk Facing Deutsche Bank At This PoWorswick110/2/2016
2669Never seen it put like that, but ya it's time for Yellen to go in SWAP mode.ggersh19/27/2016
2668AH, YES TIME TO POST AGAIN Deutsche Bank on the buffers. .... it is probably tWorswick39/27/2016
2667I'm not sure that this belongs on this thread, but it has to do with bankingSam-9/14/2016
2666Riding the Pestilence .... Everyone ready to rock and roll? Worswick-8/8/2016
2665China, welcome to the world of derivatives. wsj.comggersh-8/4/2016
2664China, welcome to the world of derivatives. wsj.comggersh-8/4/2016
2663No worries......of course and then one wonders why the Brits chose Brexit of couggersh-7/10/2016
2662Many thanks for the graph.... which refers to this .... of course when the countWorswick17/10/2016
2661 caucus99percent.com [graphic]ggersh-7/10/2016
2660Let's see.... According to some sources world derivative exposure is now a Worswick-7/10/2016
2659Amazzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzing ...! A Furious Italian Prime MiWorswick-7/6/2016
2658The only fundamental is the "CB's" ggersh-7/3/2016
2657Barexit .... stunning. From Yves Smith, Naked Capitalism. Work through the tortWorswick-7/3/2016
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