Greetings Economists,
On Oct 16, 2008, at 3:00 PM, Chris Burford wrote:
I would be interested to know whether other list members think that
the
collapse of these 50 trillion dollar structures will cause an
unimaginable
further lurch into profound depression or whether they are just
worthless
air, and could be blown away.
Doyle;
In a discussion of J.P. Morgan's derivatives this is a quote from
Conde Nash Portfolio -
J.P. Morgan continues to dominate the world of derivatives. It has
derivatives contracts tied to $90 trillion of underlying securities.
Of that, $10.2 trillion are credit-derivatives contracts. Those mind-
boggling totals are somewhat misleading. They reflect what is called
the “notional” amount in the world of derivatives, based on the
underlying amount of the contract, not its current value. When
offsetting contracts are taken into account, that figure is whittled
down to a much smaller—though still enormous—$109 billion of
derivatives, of which $26 billion are credit derivatives. That’s the
amount the bank could lose if all its trading partners went out of
business, an extremely remote event. But the exposure is climbing, up
17.4 percent from the end of 2007. That’s equal to 20 percent of the
bank’s net worth.
http://www.portfolio.com/views/columns/wall-street/2008/10/15/Credit-Derivatives-Role-in-Crash
Doyle;
Observe the notional value being stated above.
thanks,
Doyle Saylor
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