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$1 Quadrillion of Unregulated Debt At Core of Coming Derivatives Crisis
John Tiffany
American Free Press
Saturday, Sept 27, 2008
Despite all the blather and swearing-on-the-Bible pronunciamentos from establishment “pundits,” our house-of-cards financial system is not fundamentally sound.
Expect such indices as the Dow to tumble even much lower when the Pandora’s box of derivatives is fully opened.
Believe it or not, the Dow is still not far from its all-time peaks, with a lot further to fall. The depression is still in its early stages. We are looking at $1 quadrillion of unregulated debt, with much of it at risk. (And we used to think $1 trillion was a lot.)
These are literally inconceivable sums. Counting one dollar per second, it would take 32 million years to count to one quadrillion.
(Article continues below)
The stock market in this era of the privately owned Federal Reserve Bank is a giant craps shoot. Much of it is quite unregulated, especially the invisible market of derivatives. The sub-prime mortgage market collapsed, which is now being followed by a giant credit crisis. Now we are looking at the possible collapse of the derivative market.
President Bush failed at every business he has been associated with. He has always had his dad to bail him out to avoid bankruptcy. But this time his dad and even Henry Paulson can’t keep Bush from facing the failure of his economic policies at the helm of the U.S. economy.
America’s oversized debt pyramid has just begun to wind down. The Federal Reserve has announced that it is giving an $85 billion loan to American International Group (AIG), the world’s largest financial conglomerate, in exchange for a nearly 80 percent stake in the firm.
The Associated Press calls it a “government takeover,” but as Ellen Brown, J.D., author of The Web of Debt, says, this is not a real nationalization like the purchase of Fannie Mae/Freddie Mac stock by the U.S. Treasury. “The Federal Reserve,” she points out, “has the power to print the national money supply, but it is not actually a part of the U.S. government.
It is a private banking corporation, owned by a consortium of private banks. The private banking industry just bought the world’s largest insurance company.” But they used taxpayer money to do it.
Proposals for reforming the banking system are not even on the radar screen of establishment politics, but the current system is collapsing at train-wreck speed. Says Brown: “We need to stop funding the culprits who brought us this debacle at our expense. We need a public banking system that makes a cost-effective credit mechanism available for homeowners, manufacturing, renewable energy, and infrastructure; and the first step to making it cost effective is to strip out the swarms of gamblers, fraudsters and profiteers now gaming the system.”
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19 Responses to “$1 Quadrillion of Unregulated Debt At Core of Coming Derivatives Crisis”
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September 27th, 2008 at 6:11 am
http://ca.youtube.com/watch?v=X4rD6muiCd4
September 27th, 2008 at 7:58 am
HEY STUPIT… YEAH YOU GEORGE W BUSH. WHY DON’T YOU ASK THE BIN LADEN FAMILY TO BAIL YOU OUT OF THIS ADVENTURE YOU CREATED. THEY ALWAYS BAILED YOU OUT WITH MONEY IN THE PAST… BABUSTO .
September 27th, 2008 at 8:49 am
Is there even 1 quadrillion dollars worth of anything on this planet?
Tax dollars come from taking a certain percentage of the GOODS and SERVICES made by PEOPLE. These debts apparently come from people pushing funny little buttons on their computers and then letting these computers push their own funny little buttons for awhile. To think you can cover the second with the first is lunacy.
The current system is untenable.
September 27th, 2008 at 9:39 am
“U.S. Treasury. “The Federal Reserve,” she points out, “has the power to print the national money supply, but it is not actually a part of the U.S. government.
It is a private banking corporation, owned by a consortium of private banks. The private banking industry just bought the world’s largest insurance company.” But they used taxpayer money to do it.”
People have the right to be angry over such a brazen theft and scam by the white collar criminals and banksters, The Fed is a cancerous growth and must be abolished immediately. No sovereign country should ever allow anyone to print money except for the state itself.
Sir Josiah Stamp, former president of the Bank of England, put it this way: “Bankers own the earth. Take it away from them, but leave them the power to create money and control credit, and with a flick of a pen they will create enough to buy it back.”
September 27th, 2008 at 10:05 am
1 quadrillion? Really? The number keeps getting bigger and bigger. I think the writer just pulled this number out of his ass. No source is cited yet the words “unregulated debt” figure prominently. Hoyw could we regulate something for which we have no source of valid information, and why would we want to do so?
September 27th, 2008 at 10:16 am
They want a fascist planet with the superwealthy ruling it all
Since we’re too independent, America must be led to fall
When our credit’s been exhausted to subdue the Middle East,
They’ll install our debtor nation in the body of The Beast
Traitor…Dare call it treason
http://www.youtube.com/watch?v=uw5dP5gy2Vs
September 27th, 2008 at 10:54 am
The more I think about this, the more I want to scream “THINK PEOPLE”.
Derivatives are contracts. If I sold to you a contract stating that if you loan me 2 dollars now I will gladly pay you, next Tuesday, 1 quadrillion, would that make you a quadrillionaire? No. It would not. This contract is unenforceable and invalid because I do not have, and cannot get, the money. Neither can the derivatives contracts in question be enforced because no one has or can get the money, UNLESS THE GOVERNMENT PRINTS THE MONEY! This is what we are being ask to do, print the money so that contracts equaling a value of one year of the entire 2007 US GDP multiplied by 200!!!
THINK PEOPLE!!
September 27th, 2008 at 11:33 am
$1 quadrillanth Dollar System Scheme was called INFINITY twenty+ years ago when I took economics at UT. Nobody thought we’d ever see it happen. I really wish I could have lived my life without seeing this incompetent greed. I have no children, but I love my 9 year old nephew. My time is running out. At 44 I have a respiratory problem that can not be cured. The ventalator that kept me alive when I had pneumonia, also caused other problems. I don’t think my sister has enough common sense to make it if this gets worse. She probably won’t have her USPS job for much longer. My husband has promised me he would always involved in my neghews life. I really hope so
September 27th, 2008 at 11:55 am
You need to understand that the current crash is just based on a fall in the perceived value of the financial instruments used by the banks in an attempt to make huge profits. As the instruments are now worth less than what the banks paid and as every bank has loaned out/invested more cash than it has liquid funds to cover; as soon as each bank’s debts become payable it will fall. Normally it would just borrow from Peter to pay Paul but right now Peter isn’t lending and Paul is about to get nasty.
The banks are in effect waiting for their creditors to go bankrupt first – last man standing takes all the assets.
September 27th, 2008 at 12:49 pm
The amount of derivatives at risk is actually closer to $1.5 quadrillion. Many of those contracts however are hedged – or offsetting, however they are so highly leveraged that tiny moves in the basis translate to gigantic moves in the contract yields or losses.
I think that if all of them were just wiped off the books it would probably tranlate to a loss of about $5 Trillion or so.
The real reason for this bailout is not toxic mortgages, thats small potatoes and easily written off. even Bush admitted that the vast majority of mortgages are good. The banksters want their derivatives bailed out. That’s the REAL money. Ther mortgages might be painful to write off but they are not bank killers. Derivatives collapsing onto a singlarity can and will destroy the fortunes of the elite, even the old time money.
September 27th, 2008 at 7:40 pm
that’s an astonishing figure, surely the house of cards is falling !!!!!!!!!!!!!
http://www.youtube.com/watch?v=Vma8wnb6UmI
September 28th, 2008 at 12:06 am
You know what this is?
This is basically a matter that is often heard in sports.
This is a matter of WHO WANTS IT MORE.
The one who WANTS it more will win this thing. Do the billionaires and millionaires on Wall Street WANT IT MORE, or do the American people WANT IT MORE?
This is our opportunity to take our country back from the clutches of the fascist cabal.
The government can create credit. The Fed does not want us to create credit.
So I ask again. WHO WANTS IT MORE???
September 28th, 2008 at 12:23 am
Alex,
I understand that the NOTATIONAL value given the global derivatives market by BIS earlier this year was 1.14 quadrillion, about half of which falls within some regulatory regime and about half which does not. I also understand that if these were unwound the total loss would be a single digit trillion. The larger figures the writer and you, where did these come from? The BIS figure is not to be taken at face value (I couldn’t resist). I know what the BIS is as do you, why should we believe what they say? Could this number be nothing more than a “spell” cast upon the mind of the masses to stun us into immobility?
September 28th, 2008 at 1:12 am
Do Logic, what do you mean by “unwound”?
Everybody and their grandmother on Wall Street is INSURED against LOSSES. So if a bank fails, or a stock goes down or whatever, there is probably a DERIVATIVE to “cover” it.
What’s “funny” is that even the financial institutions which create these derivatives contracts are “insured” by other derivatives contracts.
In other words, its like a poker player who insures himself against losses by purchasing derivatives contracts offered by another gambler he is PLAYING against. Each gambler insures the other against losses! And they have been calling this GDP(!!!) for 20 years!!!
Its a ZERO sum game. Its FICTIONAL. The WHOLE THING was fictional for 30+ years! The ratings agencies were PAID to provide strong ratings, and they were OWNED by the very companies they were rating!!!
Purchasing the derivative is cheap, but PAYING the derivative (as AIG found out) is orders of MAGNITUDE more expensive.
September 28th, 2008 at 5:22 am
Andrew Butter writes:
I always thought that it was illegal to take out insurance on your next-door neighbor’s house in case it burnt down. What CDS’s allowed the banks to do was to write a hundred policies, and now one house in fifty is in danger of burning down, and the guys that wrote a hundred policies on each house are in danger of defaulting. And the way the system is structured that could set of a domino meltdown of CDS’s,
http://www.marketoracle.co.uk/Article6495.html
September 28th, 2008 at 7:16 am
It is a biggest identity hijacking in history! Fed Res is using your identity and has access to your credit card and is buying anything it wants. The problem is that we (the official owners) and calling our bank (US govn’t) to report the theft, but are told that not only it isn’t true and it is not happening, and that we are crazy to believe that “non-sense”, but also, they are saying that it is us, who has a false identity and Fed Res is the true self! So now, they gave credence to a thieve knowingly so, because the thefts are the real owners of the bank, those we mistakenly thought that we can trust our assets. Why would they do that, you may wonder, because all the conditions were right for it to happen. the last brick as been laid. It took them over a century to acoumplish this (when Fed Res first was started), but now it is in a full out view. Our assets are being transferred to a biggest criminal organisation in history!
Check your CC statement lately?
Stand up for you future!
Punks.
September 28th, 2008 at 1:46 pm
@Punks: “The problem is that we (the official owners)..”
You (US citizens) are not the owners of ‘your’ money. The owner is the FED.
September 29th, 2008 at 8:23 am
Has anyone ever thought about how the Governmant is getting away with using our tax dollars to fund takeovers of private institutions. Nowhere in the Constitution does it authorize the Gov. to do what they are doing. However, most of the sheeple just stand by and let them do what they will with OUR MONEY! So as we watch our country crumble into oblivion and all of the criminals get away with murder just remind yourself of this fact, we let it happen and continue to let this happen. Read our Constitution and Bill of Rights and you will see what is going on.
September 29th, 2008 at 11:38 pm
Although I am an EU citizen living in Holland the last few years I read about the ‘Derivative bubble’.(Wish that would exist in math.) An US-friend of mine is helping the homeless somewhere in the USA and two years ago she told me it was bad, the last year she wrote that it was very bad. During the time I know her I also read that the rich were doing quite well. Hence forwards I took the decision that a ‘disaster will happen soon’ and now it will come. Accept the ‘700 billion’ and vote for someone who will clear the situation for the coming decades.