Quote:
Originally Posted by gwynned
Something really jumped out at me:
"Understand, I very much doubt that this gimcrack legislation that has just been passed is going to help very much for very long. The reason is that the total amount of derivatives now in the marketplace probably exceeds $500 trillion. That's right, $500 TRILLION dollars, and at present all of it is, at best, salable only at a substantial discount."
Not sure where he got this number or how the derivatives market affects the average person. According to Henry Liu (Asia Times http://www.atimes.com/atimes/Global_.../JG22Dj06.html)
"Today the two companies (Fannie and Freddie) also hold or guarantee loans with face value of more than $5 trillion, about half the nation's mortgages. Market analysts estimate that the market value of this liability may be less than 50% unless the housing market recovers. In other words, the GSEs face a $3.5 trillion exposure to default if they cannot raise new funds in the credit market. "
So, to me, the 500 trillion number is suspect. Using the above numbers as an estimate, the total amount of mortgages in the US is about 10 million. |
Hate to be the bearer of bad tidings!!!
Check out about 2/3 down, just past the charts. Look for Table 1, TOP 25 COMMERCIAL BANKS AND TRUST COMPANIES IN DERIVATIVES. Numbers are in millions of dollars, so top line says J. P. Morgan has $1.4 trillion in assets and $90 Trillion (with a T!) in derivatives, which are packages of debt. Which Warren Buffet has decried for years. About 180 trillion in the top few banks. Draw your own conclusions.
http://www.occ.treas.gov/ftp/release/2008-74a.pdf
BTW, the OCC on the document is for “Office of the Comptroller of the Currency,” official US government:
http://www.occ.treas.gov/
