2010.03.22
I saw the redoubtable Ellen Brown on Russia Today's Spotlight programme this morning talking about the Derivatives Bubble.
This appears to be a current things that isn't yet burst, but its about to and we're talking debt in the Quadrillions of dollars.
And I wondered, does ayone know anything about this light at the end of our current tunnel?
Here is one clue I found going back to 16th October 2008
http://www.siliconvalleywatcher.com/mt/archives/2008/10/the_size_of_der.php
Here is another referred to in one of the responses therein, an overview, if you will:
http://seattletimes.nwsource.com/html/businesstechnology/2008477995_toxicdebt070.html
Than I spotted this thread after googling "Anglo Irish Derivatives"
http://www.irisheconomy.ie/index.php/2009/08/20/nama-to-purchase-derivatives/
The OP notes the following:
Page 15 of the draft NAMA legislation tells us that the definition of a “credit facility” includes instruments such as ”a hedging or derivative facility.” Section 56, starting on page 46, then defines eligible assets for purchase by NAMA as a range of different types of “credit facilities” as well as “any other class of bank asset the acquisition of which, in the opinion of the Minister, is necessary for the purposes of this Act.”
In theory, this allows NAMA to purchase derivatives from the banks. And indeed, it turns out that they are doing so
A respondent notes the following comment and give the links
Without knowing the contacts that were engaged in, we have no way whatsoever of knowing the extent of any potential liability. At a high level, we only know the amounts that have been written and type of derivative that was entered into.
Anglo Irish Bank Derivatives Book - Page 76
[broken link removed]
[broken link removed]
AIB Derivatives Book - Page 172
[broken link removed]
[broken link removed]
Bank of Ireland Derivatives Book - Page 139
[broken link removed]
[broken link removed]
The combined sum of derivatives from our banks run into the hundreds of billions. While this is normal for banks in the course of their business (they need to be able to hedge against interest rate movements, currency risk, etc), it is worrying that NAMA has specifically identified derivatives as being a liability.
This is indeed a scrotum-tightening turn of events.
We're buckled with property debts valued at 50-60 Billion Euro.
How will we manage with Derivative Debts in the hundreds billions of Euro if these instruments don't cancel each other out?
If you read the earlier articles, it seems that it is the need for reliance on others to catch the ball in the Derivatives Market that has provoked what to many has seemed like unseemly and unnecessary coddling of banks that should have been allowed to fail.
It looks as if we, our children, and our children's children are all going to be screwed to prop up the Banks gambling debts.
I'd be most happy for someone to contradict me.
ONQ.
I saw the redoubtable Ellen Brown on Russia Today's Spotlight programme this morning talking about the Derivatives Bubble.
This appears to be a current things that isn't yet burst, but its about to and we're talking debt in the Quadrillions of dollars.
And I wondered, does ayone know anything about this light at the end of our current tunnel?
Here is one clue I found going back to 16th October 2008
http://www.siliconvalleywatcher.com/mt/archives/2008/10/the_size_of_der.php
Here is another referred to in one of the responses therein, an overview, if you will:
http://seattletimes.nwsource.com/html/businesstechnology/2008477995_toxicdebt070.html
Than I spotted this thread after googling "Anglo Irish Derivatives"
http://www.irisheconomy.ie/index.php/2009/08/20/nama-to-purchase-derivatives/
The OP notes the following:
Page 15 of the draft NAMA legislation tells us that the definition of a “credit facility” includes instruments such as ”a hedging or derivative facility.” Section 56, starting on page 46, then defines eligible assets for purchase by NAMA as a range of different types of “credit facilities” as well as “any other class of bank asset the acquisition of which, in the opinion of the Minister, is necessary for the purposes of this Act.”
In theory, this allows NAMA to purchase derivatives from the banks. And indeed, it turns out that they are doing so
A respondent notes the following comment and give the links
Without knowing the contacts that were engaged in, we have no way whatsoever of knowing the extent of any potential liability. At a high level, we only know the amounts that have been written and type of derivative that was entered into.
Anglo Irish Bank Derivatives Book - Page 76
[broken link removed]
[broken link removed]
AIB Derivatives Book - Page 172
[broken link removed]
[broken link removed]
Bank of Ireland Derivatives Book - Page 139
[broken link removed]
[broken link removed]
The combined sum of derivatives from our banks run into the hundreds of billions. While this is normal for banks in the course of their business (they need to be able to hedge against interest rate movements, currency risk, etc), it is worrying that NAMA has specifically identified derivatives as being a liability.
This is indeed a scrotum-tightening turn of events.
We're buckled with property debts valued at 50-60 Billion Euro.
How will we manage with Derivative Debts in the hundreds billions of Euro if these instruments don't cancel each other out?
If you read the earlier articles, it seems that it is the need for reliance on others to catch the ball in the Derivatives Market that has provoked what to many has seemed like unseemly and unnecessary coddling of banks that should have been allowed to fail.
It looks as if we, our children, and our children's children are all going to be screwed to prop up the Banks gambling debts.
I'd be most happy for someone to contradict me.
ONQ.