Global Derivatives: the $ 1.5 Quadrillion Time Bomb

Published on Global, by Stephen Lendman, July 26, 2015.

When investing becomes gambling, bad endings follow. The next credit crunch could make 2008-09 look mild by comparison. Bank of International Settlements(BIS) data show around $700 trillion in global derivatives.  

Along with credit default swaps and other exotic instruments, the total notional derivatives value is about $1.5 quadrillion – about 20% more than in 2008, beyond what anyone can conceive, let alone control if unexpected turmoil strikes.

The late Bob Chapman predicted it. So does Paul Craig Roberts. It could “destroy Western civilization,” he believes. Financial deregulation turned Wall Street into a casino with no rules except unrestrained making money. Catastrophic failure awaits. It’s just a matter of time.

Ellen Brown calls the “derivatives casino…a last-ditch attempt to prop up a private pyramid scheme” – slowly crumbling under its own weight.

For years, Warren Buffett called derivatives “financial time bombs” – for economies and ordinary people … //

… Near the end of his tenure, Bill Clinton signed legislation repealing Glass-Steagall (the 1999 Gramm-Leach-Bliley Act – letting insurance, investment and commercial banking merge) and the Commodity Futures Modernization Act (permitting unregulated commodity and derivatives trading).

A casino culture of anything goes persists. When counter-parties don’t have funds to pay on demand, bubbles begin deflating. It’s just a matter of time before current market mania ends.

(full text).

(Stephen Lendman lives in Chicago. He can be reached by e-mail. His new book as editor and contributor is titled “Flashpoint in Ukraine: US Drive for Hegemony Risks WW III.” Visit his blog site. Listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network. It airs three times weekly: live on Sundays at 1PM Central time plus two prerecorded archived programs).


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