JimBowie1958
Old Fogey
- Sep 25, 2011
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This guy thinks so.
When The Derivatives Market Crashes (And It Will) U.S. Taxpayers Will Be On The Hook | Hawaii News Daily — World
I am afraid he is right as this is essentially what got all the European nations in trouble; the governments assuming responsibility for the debts of their big banks.
We could stop it through Congress, but I have tried to speak with someone on the matter several times with both Senators and my Rep to no response in all three cases.
When The Derivatives Market Crashes (And It Will) U.S. Taxpayers Will Be On The Hook | Hawaii News Daily — World
Warren Buffett once said that derivatives are "financial weapons of mass destruction", and that statement is more true today than it ever has been before. Recently, JP Morgan made national headlines when it announced that it was going to take a 2 billion dollar loss from derivatives trades gone bad.
Well, it turns out that JP Morgan did not tell us the whole truth. As you will see later in this article, most analysts are estimating that the losses will eventually be far larger than 2 billion dollars.
But no matter how bad things get for JP Morgan, it will not be allowed to fail. JP Morgan is the largest bank in the United States, so it is essentially the "granddaddy" of the too big to fail banks. If JP Morgan gets to the point where it is about to collapse, the U.S. government and the Federal Reserve will rush in to save it. Because of this "security blanket", banks such as JP Morgan feel free to take outrageous risks.
Today, JP Morgan has more exposure to derivatives than anyone else in the world. If they win, they win big. If they lose, U.S. taxpayers will be on the hook. Not only that, but thanks to Dodd-Frank, U.S. taxpayers are on the hook for bailing out the major derivatives clearinghouses if there is ever a major derivatives crisis. So when the derivatives market crashes (and it will) you and I will be left holding a gigantic bill.
Derivatives almost caused the complete collapse of insurance giant AIG back in 2008. But instead of learning our lessons, the derivatives bubble has gotten even larger since that time.
A Bloomberg article that was published last year contained a great quote from Mark Mobius about derivatives....
Mark Mobius, executive chairman of Templeton Asset Managements emerging markets group, said another financial crisis is inevitable because the causes of the previous one havent been resolved.
There is definitely going to be another financial crisis around the corner because we havent solved any of the things that caused the previous crisis, Mobius said at the Foreign Correspondents Club of Japan in Tokyo today in response to a question about price swings. Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes.
Never in the history of the world have we ever seen anything like this derivatives bubble.
But instead of getting it under control, we just allowed it to get bigger and bigger and bigger.
I am afraid he is right as this is essentially what got all the European nations in trouble; the governments assuming responsibility for the debts of their big banks.
We could stop it through Congress, but I have tried to speak with someone on the matter several times with both Senators and my Rep to no response in all three cases.