America’s Derivative Market is Unbelievably Huge and Totally Unregulated

The derivatives market is a massive bubble waiting to burst, and since no one knows how the money flows or the system works, we don’t know what will trigger the crash or when. We do know that a derivatives crash will be catastrophic for the world’s financial system.

Essentially, derivatives are a betting system, like a casino, with bets placed on future values and the performance of practically anything of value. The system is not regulated whatsoever, and you can buy a derivative on an existing derivative. Most large banks try to prevent smaller investors from gaining access to the derivative market on the basis of there being too much risk.

Last year the world derivatives market amounted to $707 trillion, of which the 9 largest banks in the US account for $230 trillion; or 3 times the amount of the entire world economy!

The author discusses the 9 too-big-too-fail banks, what their derivatives exposures are and what scandals they have been involved in.

To conclude, there is no government in the world that has the kind of money that is sunk into derivatives. This vast, unregulated market presents a massive financial risk. The corruption and immorality of the banks makes the situation worse. A crisis is inevitable.

To read Lorimer Wilson article:  America’s Derivative Market is Unbelievably Huge and Totally Unregulated

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Tagged as: Bank, Business, Derivative Market, Derivatives, JPMorgan Chase, Paul Wilmott, United States, World economy