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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 $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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ReplyMessage PreviewFromRecsPosted "The Bloomberg article dropped this bombggersh3June 25
2740At the 14 minute mark or so The FED owns it all, treasury, muni, corporate debtggersh-June 23
27392020 a rerun of 2008 which was a rerun of 2000 which all began in 1987 when raygggersh-May 12
2738To you all .... the mildest of the synthetics goes down .... " lipstiWorswick5May 12
2737Nice watch guys! [youtube video]ggersh-April 27
2736Clark this might be a better representation of what is actually happening, IMO ggersh-April 23
2735Well here it goes .... in the meantime before I get into this BELOW.... EVERYOWorswick2April 23
2734Negative Oil Prices, From the Folks Who Brought You the Financial Crisis barronsThe Ox1April 22
2733It would seem to me that all of these issues will surface down the road but in tThe Ox-April 19
2732Instead of "thousands" I might narrow that down to the "terrible ggersh-April 18
2731Instead of "thousands" I might narrow that down to the "terrible ggersh1April 18
2730Well it took a bit of time .... 22 and 3/4's of a year to get bank-based finWorswick2April 18
2729It will be fascinating to see how all this debt is addressed over time. I agrThe Ox-April 9
2728Try doubling down on $27 trillion or better yet quadrupling down. After doubWorswick-April 9
2727Largest French Bank Lost $200MM On Equity Derivative Trades As Market Crashed Worswick-April 9
2726Your guess is as good as mine! If every week, the FED must announce a $2 TrilliThe Ox-April 9
2725Many, many thanks Ox! My god did they bury these numbers ... a guess at wherWorswick-April 9
2724The gates have been the top of my head that's at least $16 triggersh2April 9
2723The Levy Economics Institute used the data that the Federal Reserve was forced tThe Ox1April 9
2722Now we know what they accomplished in their magic beginning 13 "years pastWorswick3April 8
2721Fed’s Balance Sheet Blasts to $5.8 Trillion; Suggests Fed Is Back to Bailing OutWorswick2April 8
2720Crazy stuff going down these days, maybe it's a C1 Whale?ggersh-March 31
2719I saw the question and I had the same thought as I read the piece. I can't The Ox-March 31
2718I have to question this as what does C1 have to do with Oil/Gas industry and $1bggersh-March 31
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