Derivative market is a black hole

Après on se demande pourquoi le peuple veut avoir une taxe Tobin et l’ensemble des pays Européens, sauf aux endroits que les politiciens ont été achetés par leurs oligarchies financières, ex : États-Unis, Londres, Canada …


Extrait de: The chastisement of the American saver – Federal Reserve offers a higher interest rate to banking reserves than too big to fail banks offer American savers, mybudget360, October 17th, 2011

The pangs of unemployment

While talk of a recovery is largely tied to Wall Street gains, on the ground the sentiment is anything but:

The median duration of unemployment is the highest it has been since records started being kept in the 1960s.  The current median duration is twice as high as the painful recessions brought on during the early 1980s.  Much of this has to do with a disappearing middle class and the growing inequities in our system.  In previous recessions jobs were temporarily lost but many people were able to get back on track once the recovery picked up steam and momentum.  Today, most of the recovery gains have gone to the top one percent and an outsized amount has gone to the glorified gamblers on Wall Street who have turned our economy into a casino.

I stumbled upon this chart which boarders on the absurd regarding banking derivatives:

US Bank Derivative Exposure

The biggest U.S. banks have some $231 trillion in derivative exposure as of December of 2010. 

This market is a black hole and is like the Wild West of trading.  Global GDP is roughly $58 trillion! 

These kind of absurd bets, many that do cancel each other out, largely show how out of control and leveraged our financial system has become.  When you have people on Wall Street day trading and speculating making half a million dollars a year in their twenties betting on people being foreclosed on, you need to ask yourself what is the true purpose of our banking system?  At the moment it is largely a theft on the American public. 

The financial system’s main mission should be to allocate capital
to areas of greatest growth in the real world economy.

Yet these derivative markets are based on non-realistic side bets.  One issue with subprime mortgages for example wasn’t necessarily the bad mortgages.  That is an easy issue to resolve.  Debt goes bad, bank takes home back.  Yet what caused systemic risk were the multiple bets on top of the principal loan amount that caused system wide problems.