Here's your problem 'total bank holdings of derivatives estimated to be "only" $164.2 trillion' LINK

[Blackhatjack]

trillion
By Mogambo Guru • April 29th, 2008 • Related Articles • Filed Under
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Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter - an avocational exercise to heap disrespect on those who desperately deserve it.

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Filed Under: The Americas
Tags: commercial banks • derivatives

http://www.dailyreckoning.com.au/derivatives-commercial-banks/2008/04/29/

Value of Derivatives Held By US Commercial Banks Has Plunged by $8 Trillion

There is a new report from the Comptroller of the Currency titled "OCC's Quarterly Report on Bank Trading and Derivative Activities, Fourth Quarter 2007", which shows that total bank holdings of derivatives is estimated to be "only" $164.2 trillion, whereas I seem to remember that the global glut of derivatives is upward of $700 trillion, which are both numbers so big that I cannot even begin to comprehend the enormity of them.

The report shows that the notional value of derivatives held by U.S. commercial banks has suddenly plunged by a whopping $8 trillion, which is (unbelievably) still only 5% of the total, and which merely takes the total down to the aforementioned-yet-still-staggering $164.2 trillion.

When I realized that $8 trillion is more than half of America's GDP, that is when I realized that "Houston, we seem to have a problem, as we are on fire, and we are tumbling out of control into the sun where we will soon be fried to a cinder."

And let's not forget that even this baleful news is the best that the banks can come up with, as the whole report is based on banks volunteering to tell stories about themselves, which is unbelievably the same as with, according to an article in the Financial Times , Libor rates, which are the agreed-upon interest rates that London bankers agree to charge on short term loans to each other.

[MineralMan]

1. It's all leverage. Physics, sorta.

If you have $10, you can now act as though you have $1000. If, that is, you're a banker, a stockbroker, or some other investor.

Give me $2 and I'll invest in a way that, if it works, I'll give you $4 in six months. Pretty cool, huh? Well...of course there's a risk that I'll screw up and lose money. Then, I keep your $2. The investment? Well...I'm giving your $2 and all the other money people are investing with me to this guy who is expecting pork bellies to go up 10%. If they do, then he'll invest that money in gold futures. If that does well, he'll invest the return in variable rate mortgages. Finally, when he makes all that money, I'll get mine back and pay you the $4.

No, I can't absolutely guarantee you'll get the $4. But, it's always worked for me before. I've got the whole thing figured, and my buddy...well...he's a Wall Street genius. Go to his blog at www.goodmoneyafterbad.com. He spells it all out there. He's made a fortune...drives a Ferarri...flies down to Antigua almost every week and stashes his cash in a bank he knows there...all hush-hush, you know...no taxes.

Sure...I can handle $20. $20'll get you $40. The more you invest the more you earn.

[benld74]

2. OUTLAW DERIVATIVES

How the hell is it legal to trade something that DOES NOT EXIST!

[sam sarrha]

4. OCD Gambling Addicts.. i always thought they were 'Laundering' Insider Trading. how else can they

profit from such nonsence..??

[sam sarrha]

3. it's FAR PAST the Time we had a "Non-Value Added Tax" on profits of Derivatives etc.. of 98%

if someone is skimming/scamming the money stream without adding value, tax them out of existance..