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Showing Original Post only (View all)Wait, the Derivatives market is worth $1,200 TRILLION dollars??? [View all]
That's 20 times the world's GDP. Wow, Sauron has been pretty gosh darned busy conjuring up all that imaginary money. Who's going to cover this mess if it goes belly-up?
On a side note: I'm going to have to go back to economics class just to understand some of what is being said here.
http://www.dailyfinance.com/2010/06/09/risk-quadrillion-derivatives-market-gdp/
Big Risk: $1.2 Quadrillion Derivatives Market Dwarfs World GDP
By Peter Cohan
Posted 10:45AM 06/09/10
Posted under: Economy, Investing, Investing Basics
One of the biggest risks to the world's financial health is the $1.2 quadrillion derivatives market. It's complex, it's unregulated, and it ought to be of concern to world leaders that its notional value is 20 times the size of the world economy. But traders rule the roost -- and as much as risk managers and regulators might want to limit that risk, they lack the power or knowledge to do so.
A quadrillion is a big number: 1,000 times a trillion. Yet according to one of the world's leading derivatives experts, Paul Wilmott, who holds a doctorate in applied mathematics from Oxford University (and whose speaking voice sounds eerily like John Lennon's), $1.2 quadrillion is the so-called notional value of the worldwide derivatives market. To put that in perspective, the world's annual gross domestic product is between $50 trillion and $60 trillion.
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Yep, I have a friend with a masters in math from MIT. He sat down and explained them to me
stevenleser
May 2012
#33
Banned? Oh no don't do that, just because we silly mortals cannot understand it.
Zalatix
May 2012
#34
That is a powerful metaphor, I hope you will consider building an OP
coalition_unwilling
May 2012
#43
Actually, the CFTC does not have regulatory authority over many of the
coalition_unwilling
May 2012
#42
Yes, I'd like to see the derivitives market regulated by the Nevada Gaming Commission
Jack Rabbit
May 2012
#48
There are two problems actually. Your problem is one of them, in that
coalition_unwilling
May 2012
#44
At least the Roman empire created some great art and philosophy that
coalition_unwilling
May 2012
#45
You are conflating currency (a physical form that money takes) and money (the
coalition_unwilling
May 2012
#46
Here's a good example from real life: AIG sold credit default swaps against
coalition_unwilling
May 2012
#47