700 TRILLION..that is what the estimate is for global derivatives!! WERE DOOMED!
Posted April 24th, 2008 by SIERRAHPBT
output
hope you all read this and understand what this is.. very important!
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This doesn't mean gold isn't
This doesn't mean gold isn't a great investment, since in an evironment of deflation against the dollar, some items will fall faster than others. Houses for example may fall since there are too many on the market and a family can always consolidate and share a house with grandparents, children and grandchildren sharing one home. But the bankers if they play their cards right strip away a lot of wealth as long as the law of the land requires that taxes be paid in dollars and contracts be paid in dollars. I guess this makes it even more important for Ron Paul to get into office so that we can have an alternative competing currency.
grant
Gary North
He had an interesting view on why Gold was dropping, He also laid out an argument on why he thinks the Fed is NOT increasing the money supply as much as people think
and Gary North thought that
and Gary North thought that the world was going to end at midnight 1999... he was the biggest y2k doomer and gloomer... not to say I think what he said wasn't right with the evidence! but Ron Paul seems to think differently...
as for me and my home, we shall worship the LORD
I only have one question, if
I only have one question, if there are so many dollars out there, why can't people get enough of them to pay off their mortgages? We should be tripping over them on the street, shouldn't we? If dollars aren't spent they have no value. And if all the money is spent on foriegn products then the dollars are being held somewhere aren't they? I know there are trillions of dollars worth of derivatives out there, but isn't that just speculated value that can evaporate? Like the cost of a persons house, if there are few dollars out there exchanging hands for people to buy homes the price of the house goes down, it still has the same value, ie a place to sleep, keep the rain off ect... but if you need to sell to pay off a debt or you can't manage the mortgage, you sell for what you are able to get. It seems to me that if world central bankers are able to keep "actual" dollars off the market (not imaginary credit notations) that the dollar will increase in value. Leading to what some Ron Paul people suggest that bankers would first cause inflation and then deflation to get property away from people. Wasn't this the same thing that happened during the great depression? Hadn't bankers lent out more gold in the form of credit than they actually had?
grant
I think Sinclair said it was
I think Sinclair said it was $1.14 quadrillion.
yep your right! the mogabo
yep your right! the mogabo was off a little!
as for me and my home, we shall worship the LORD
Sinclair, just another Alex
Sinclair, just another Alex Jones type fear monger. The guy is well versed in his knowledge, but his whole approach is just a big put off....unless you are a loud mouthed douche that refuses to accept well laid out counter opinions, as some of the folks in this very thread are. I think the ship is tanking for sure, but I don't tell jzneff he's an @sshole or call him smart guy. He's not being rude to anyone, he just doesn't agree, and he lays out why he doesn't agree. I don't agree with him, but he has every right to be here saying what he thinks without people calling him names and being beligerent just to be that way. THAT makes me hesitant to listen to people who act that way because it's irrational, reactionary and overall, pretty lame.
in regards to Sinclaire I
in regards to Sinclaire I think your wrong.. the guy is an expert in this field.. look at his resume... look at the business's he's owned or has.. he deals directly with this stuff.. he is the one I trust more than anyone else..
its just not "his opinions".. he knows how the market works!
I have a different take on both of those men
Many people have questioned AJ's motives, but in my gut I feel he is a patriot. Jim Sinclair is not a fearmonger, he is an angel. You, NeoConned, have never impressed me as anything other than a somewhat well-read but misguided egomaniac. As long as we're slinging opinions around. ; )
exactly......these are my
exactly......these are my opinions.........you have every right not to agree with them. Sorry you feel im a well-read but misguided egomaniac. Perhaps I am SGP in disguise.....or Sandra???
Hey, you brought it up
but no, I don't think you're SGP. Your grammar, syntax and spelling are way too good.
oh, and ironically enough, I
oh, and ironically enough, I feel the same way about Sinclair as you do about me ;) A well read but misguided egomaniac.
My calculations
I blame the digital calculator invention. When they first came out (I had a sinclaire and it cost £200 in c1975) they had seven LED's. Mind you the abacus I had before that had 12 beads on a string.
'I always think of all you canvassors and precinct leaders and delegates at the front line and caucuses.
Good luck out there &Thank you. You're a gift.
ahhh yes another good read
ahhh yes another good read on derivatives...
http://jsmineset.com/
as for me and my home, we shall worship the LORD
For What It Is Worth...
I am very glad that jzneff has had the patience to stick it out on this forum. While I do not always agree with him, his intelligent and reasoned arguments are welcome as they facilitate a good discussion. You do not want to surround yourself with people who always agree with you, or you might wake up to find yourself out in the deep woods. Jzneff is helping to keep us all honest, and by challenging our positions in a reasoned and (mostly) respectful tone, he forces us to sharpen our arguments and consider where we might be wrong.
Jzneff, your argument regarding the 70's being considered the "end of the world" is a very good one, and one that has been lurking in the back of my mind for some time. Nearly every generation probably has thought that the end was at hand, and so far, they have been proven wrong every time.
However, there are still a few points for the side of impending doom. First, there is the undeniable fact that every empire has its end. Whether it happens this year or 100 years from now, we all agree that someday, the empire of the United States will cease to be. It may be gradual; it may be sudden. But it will come. (I know... doesn't sound like a point for "impending doom".... yet...)
Second, our financial and structural situation is very different today from what it was in the 70's. Our manufacturing capacity is far less than it was in the 70's, and the personal debt is also far greater. The national debt is also much, much larger with not one but two expensive wars with a third currently being pursued (Iran).
Third, our character is weaker than it once was. We have become a society addicted to entertainment. Our education system is a shambles, and our people are divided and intellectually weak. We have become a relativistic society, so it is becoming virtually impossible to rally to a common foundation upon which we can agree (hopefully I am overstating this). This makes me concerned about how our citizens would handle a second great depression once it starts. Do we have the fortitude and integrity to help each other through it?
Fourth, there is a movement toward a North American Union (documented and verifiable) that has their target date set for 2010 to implement a new community plan between Mexico, Canada, and the United States. This plan is already well underway, and a financial crisis would serve them well in tearing down resistance and ushering in the new currency. Such financial manipulations have happened many times in the past, so it is not far fetched to think that someone could "push us over the edge", so to speak. Our economy has been teetering on the edge for a while now, and it would not take much to plunge us into a depression.
Jzneff, I am curious to hear your thoughts on these issues.
khomar... you don't keep up
khomar... you don't keep up with current events! read and study for yourself.. not what anyone on this forum says! when you do that you will see where some are full of it!
as for me and my home, we shall worship the LORD
Excuse me?
Why do you say that I do not keep up with current events, and what makes you think that I do not read and study for myself? I have already seen the articles that you have been posting, and have read much of the evidence that you yourself are looking at. I am daily scanning many different news and opinion sites to try to understand what is going on.
I ask jzneff's opinion because it differs from my own, and I want to understand why to see what merit, if any, lies in his ideas. It never hurts to consider another point of view, and I have found many of his statements to have merit. He may be flat out wrong about our near term future, but can anyone say with absolute certainty what will transpire? Could you and I not also be dead wrong in our understanding?
Only through open, honest, and reasoned discussion can we avoid pitfalls and move ever closer to the truth -- and that is all that matters here. It is not about who is right and who is wrong. It is not about my ego or my opinion. It is about providing for my wife and four little boys. It is about preparing for the future, and knowing how to lead and instruct my boys so that they can survive in and hopefully change the world in which they will emerge. It is about looking for solutions and answers to the problems that face us.
I mostly agree with you: the picture is very bleak, and I think we could be facing an imminent collapse... but I could be wrong. I have been wrong before, and I know I will be wrong again. "In the presence of many counselors, there is safety."
We must examine the motives
for defending our positions, especially the prognostications for gloom/doom and it's all good. I suspect there is an unhealthy dose of ego in play. You know I always appreciate your contributions Khomar, keep on keeping it real.
I always have time for you Khomar
1) Yup...empires collapse without an exception, so far. I will never argue that we are on a path that will prevent that from happening...far from it. I believe that empires slowly grind away everything that made them great, and it's a slow death process. We're well into beginning that process, and I think it might not take a generation to get to that point. I weap for the future, but I'll fight to see that this does not happen on my watch. I believe that Keynesian system, fiat, and supply side crap are not the reason we're on this path...I do believe that welfare, socialized medicine, and ever expanding budgets and national debt will be the death of us. Keynesian economics is simply a tool to hide the slow death march from us.
2) You're correct...but exporting real manufactured goods has been (somewhat) replaced by the export of intellectual property and mind power. We design the microchips, they make them in Taiwan, and sell them around the world. We design the soccer balls, make them in Bangladesh, and sell them to England. They don't manufacture very much in Manhattan, but the minds are there, and the money goes there. It's an economy where blue collar button pushers are never going to make $40 an hour again, but through maintaining our intellectual superiority, we can still make it work. We lost a lot of our production base in the early 1980's, but still managed to keep on chugging.
3) Don't I know. Intellectual weakness is our biggest problem in the US. We're a group of millions of lazy slobs who need things spoon fed to us and then complain about the lack of $50 an hour janitor jobs. It's a tough world out there, and we're raising generation after generation of kids who are ill prepared. I'll never defend the intelligence of the average American...it's something i've hated since the day I was born. I've been kicked and shunned by more people than I can count, and I have to often dumb myself down just to fit in with a crowd. It's sickening to the pit of my stomach...it makes me cry when the most intelligent conversations i've ever had in my life have been with foreign nationals...you can't find much in the states anymore.
4) I don't think they'll manage to get there any time soon. If nothing, America still has a very strong sense of national pride...once this comes closer to fruition, it will stir up every "love it or get the hell out" redneck in this country and it will fall on its face. They may be able to form a US/Canadian union in the near future...but I hate to say there are too many racists to allow Mexico to join. This may very well be a red herring to divert our attention, because I don't see it as likely to occur.
I don't see a depression as very likely...more likely we'll have 3-4 years of recession turning into stagflation...then we'll finally take our medicine and shut the printing press down like in the 1980's. The next decade might be very painful, but only on the level of the 1980's pain. Keynesian econ has one more boom to produce before the final bust.
Here's the problem
Consider your answer to point #2:
But then just a couple lines later, you say "Intellectual weakness is our biggest problem in the US." This is what probably scares me the most: we have built our economy around the idea of intellectual superiority -- ideas, concepts, strategies. However, there are several problems here (getting off-topic, I know, but indulge me):
The rest of the world is catching up fast, and we are rapidly losing our advantages. It is the last point that also makes me wonder if we may be reaching an end sooner than we think. If Iran is successful in offering an alternative to selling oil outside of the dollar, our currency could collapse in a very short period of time.
You said that the"Keynesian econ has one more boom to produce before the final bust." Why do you believe that there is one more boom to go?
Yup
Like I said...I weap for the future. We have given away our edge through educational laziness and "no child left behind" mentality.
The reason I think we have at least another boom left to produce, is we still have at least one more generation before the real fools take over.
I think the next boom will be in biotechs...the Asians have not caught up in that market yet and I think we have the minds to drive a real explosion in that industry. Hopefully...we'll make the next one sustainable rather than drive it into the ground like the dot.com's
I hope you are right
I am not sure how much longer our house of cards can stay standing. While biotech may help segments of our economy, the drag of welfare from the decaying underbelly and the rise of social security costs from retiring baby boomers will put a tremendous strain on our economy, and we are near breaking point already. Time will tell.
In the meantime, I will continue to try to prepare for the worst and pray for the best.
The Asians may surpass us in biotech
due to the regulatory atmosphere here.
now this for your reading
now this for your reading entertainment! the derivatives market is unwinding.. ok JZ tell me how this man who is privy to inside information is a liar!
http://georgewashington2....
as for me and my home, we shall worship the LORD
Transition vs Destruction of Wealth
I think one of the points that jzneff is trying to make is that the wealth will not just disappear. Instead, it will transition from one party to another. From your linked article:
As the derivatives collapsed for Bear Stearns, it transitioned their wealth to JP Morgan (and their Federal Reserve cronies). What we are likely to see is a massive power grab using the inflated derivative system to bury the competition. Now, I think it is far worse the jzneff (if I understand him correctly) because a great deal of wealth may find itself in the hands of the very few -- even worse than it is today. This is probably the greatest danger from the derivatives market. Just a thought.
Just so you know...
back in 2003 Warren Buffett called derivatives "financial weapons of mass destruction"
back in 1993, Rep. Henry Gonzalez, the Chairman of the House Banking and Currency committee, called derivatives a "ponzi scheme"
yet Greenspan was a servant of the NY banks, did nothing and let this market get out of hand
derivatives are responsible for 50% of the earnings of these banks
Just so you know
Warren Buffett doesn't pretend to understand the derivative market fully.
In 2008, Buffett was commenting on reading a bank's annual 10-K report, and said "After a couple of hours," he said, "I had about 25 pages marked with big question marks that I couldn't answer."
Not pretending to ever know more about economics than Buffett...he has forgotten more than I could ever hope to know...but the massive explosion in derivatives happened only in the last decade, and Buffett is an old school investor.
Follow his advice, for it's always good, but also know where he's the alpha guru and where he is an admitted novice.
read it and weep smart
read it and weep smart guy!
http://www.jsmineset.com/...
as for me and my home, we shall worship the LORD
Read it, didn't weap
Jim Sinclair...interesting character. Gold bug, and especially interested in pushing your money into gold. Gold goes up as jitters about inflation and financial ruin go up...so you could say he has a vested interest in panicking you.
9/5/2007 - "I see the mountain of over-the-counter derivatives that, including all types, exceeds $30 trillion." Jim Sinclair
6/9/2008 - "The OTC derivatives are shown as $596 trillion notional value, as of December 2007" Jim Sinclair
Trust him? I don't
I trust him
He, Monty and Dan Norcini have been instrumental in helping people protect themselves from what's coming. The derivatives are still being created, even to this day. There is a reason for sierra being in your face, Khomar is a true gentleman and I am civil. But when sierra detects BS, he is in your face. I don't blame him a bit. I trust Jim Sinclair, the fact that you don't makes me very wary of you.
You are saying you are in favor of regulation
to prevent markets in derivatives?
That certainly would not be consistent with the free market philosophy of Dr. Paul. There should be no regulation of the financial markets other than the market itself. Derivatives are created because they fulfill a market need. Government shouldn't be involved in creating or prohibiting them.
No, I'm against the whole
No, I'm against the whole fractional reserve system
I'm just saying what people who know about the system think of these fraudulent derivatives
the present system is anything but a free market
there IS no free market when you have a lender of last resort because the concept of risk management becomes moot due to a moral hazard problem
Derivates are not "fraudulent."
They're simply financial instruments to reduce risk by selling the risk to others.
If government/Fed bails someone out, don't blame it on derivatives. Blame it on the government/Fed.
Partly agree, it's ultimately the
it's ultimately the govt/fed/s fault
but it doesn't change the fact that most of these OTC derivatives are fradulent. They are. They are creating asset values where there are none, and then they get a taxpayer bailout when the contract fails to perform. It's legalized fraud.
It's not
"creating asset values where there are none." Derivatives have real value, otherwise there would be no market for them.
there IS NO MARKET FOR THEM
they are OTC....when they have to mark-to-market they are 10 cents on the dollar
that is why there are writedowns
they have only begun
they are staggering the writedowns to soften the blow, but that can only do so much
The more derivatives the better
The macro-economic purpose of derivatives is to spread out risk among those able to afford to take it. They more derivatives, the more resilient the financial system.
LOL..... you have NO
LOL..... you have NO understanding of what derivatives are , do you! this has to be one of the dumbest remarks I have seen on the daily paul! go vote for obama!
as for me and my home, we shall worship the LORD
You're overstating everything
First...the market for global derivatives is not 700 trillion or 1 quadrillion, even the highest educated estimates put it no more than 600 trillion.
And there isn't 600 trillion in total risk...that is impossible based on how the derivative market works. You're talking about the total value of the market, but the total risk...and this is the total amount of money lost on a TOTAL MELTDOWN is around 15 trillion dollars.
This risk is not spread out evenly through the world economy...no, in fact most businesses, banks, and hedgefunds use derivatives only to balance their risk...they gamble against their other poisitions to generate a win-win scenario.
Yes...there are probably many firms that are overly immersed in derivative based risk...and they will collapse if the market has a meltdown...but this will cause only a global recession. This also will not cause the collapse of the US currency, because the risk is not overly concentrated in the US, it's spread relatively evenly througout the world.
I get these statistics through careful analysis of the numbers found on the website of the Bank of International Settlements (www.bis.org)
The site is down at the moment, but you can find the most accurate statistics for the derivative market there.
Put it this way...due to the 8/07 subprime fallout, the derivatives associated with debt have fallen dramatically...so there's already been a lot of pain and drop in that market with a small effect on the overall problem. Many people and companies have lost money because of debt based derivatives...but many have also profited from the drop.
jzneff, I may not speak 4
jzneff,
I may not speak 4 languages and am learning chinese like you! I may not have as good of an education as you! but I know one thing your education isn't worth Jack crap! every single article from good economists that is presented here on daily paul you shoot down. is that because you are an alien from a far away planet disguised as a human and have far superior knowledge then the rest of us lowly earthlings! your an educated idiot! you can not see the forest for the trees! the above article is written by a man who in economics is WAY above you in the food chain! I really don't know what your deal is here on the daily paul.. first I would like to know who you are, prove what you did for Ron Paul-donations, delegate etc, because everytime you come on here with your mental masturbations of giving your uneducated "ananysis" of EVERYTHING, IT GOES against Ron Paul and what he teaches! all the places where you get statistics come from places like the bank of international settlements, are terrible places to get real stats! have you not kept up with current events and know how the government lies to protect themselves.. give it up JZ.. many on here see right threw you! the fuuny thing is I can disprove most of what you say but honestly I don't even want to waist my time! your anaysis is mixed with half truths and plain BS! good luck to you! I hope many on the dailpaul see right your crap! and by the way if you want an education on derivatives go read Jim Sinclair! www.jsminest.com from the people I read he has the best handle on derivatives and what they are and what they are doing this economy! by the way.. what is your iq? 160? why arn't you a billionaire?
as for me and my home, we shall worship the LORD
LOL
A whole lot of words...a whole lack of substance. You've mentioned how often I manipulate statistics and drop half truths...but have yet to point to a specific point where i am lying, or am wrong, or am misinterpreting data.
I don't speak 4 languages...I speak 2. My wife speaks 3.
Even the best economists are often wrong. I disagree with them because I think I have a long term and rational perspective...many economists, the best of the best, thought the the 1970s were the end - of cheap oil, of the dollar, of the US economy, and of the federal reserve...they were wrong and I believe that they are again today.
Who am I, what have I done for Ron Paul?
Without going into massive amounts of detail...i'm 30, work in industrial chemistry, I have a degree in biochem, I've owned 2 houses, i'm married with a young child. I have no debt (besides my mortgage) and am just sick to death of paying half of what I work so hard for in taxes.
What have I done for Ron? What else can i do...i've educated my friends and family on Dr. Paul and the movement as a whole...I got him at least 20 and probably closer to 30 votes in the MI primary. I've donated some money to his campaign (how much is my business) and have educated myself in both Austrian and Keynesian economics, and talk to anyone who will listen about the differences and the pitfalls of Keynesian theory. I haven't joined any meetup groups or gotten too involved with hardcore supporters only because they don't need any convincing...I'll do what I can with people who don't know about the rEVOLution.
I'm not a billionare or even a millionare because I haven't found a niche yet, for now i'm satisfied with working for a living. My IQ is probably in that range, but I don't put much faith in those tests.
Nothing i've ever said is contrary to what Dr. Paul believes. I've never heard Dr. Paul say that we're headed for a total economic meltdown in the next year, but that we're headed on the path toward bankruptcy, and I completely agree with that. Just because I understand Keynesian theory, fiat, supply side economics, and all of the evils of government does not mean that i'm supportive of them...simply a matter of knowing your enemy before you can win. Read Art of War or Machiavelli for that piece of wisdom.
Finally...if you can see "threw" me so well, and if you can bear to "waist" your time...please quit talking about how full of BS I am and prove it. Shut me up if you like, I know when to admit when i've been wrong and am more than open to discussion.
Unless you'd just like to keep tossing insults my way...
Hey jzneff, Although often
Hey jzneff,
Although often times we disagree I do enjoy your well laid out arguments. It is a breath of fresh air in a sea of rants. I do feel the derivatives market can be a dangerous thing and we shall probably see how dangerous if things continue to go the way they are going. As for the 70's, had the US not backed it's currency with the sales of petroleum through the deal with the Royal House of Saud most economists would have been correct in their assumptions as the US declared bankruptcy when it decoupled from the gold standard.
That holds true with the bailing out of Bear Stearns as well. Had they not done that the whole house of cards would have came down and everything that many major economists were predicting would have already occurred by now. However, they are going to drag this out as long as they possibly can. It might take a few years but I think the collapsing of the completely fiat dollar is inevitable.
http://www.nolanchart.com...
Here is a fairly good article I just read.
Neo
Excellent article. That should clear it up for everyone. Thanks.
Update
The notional value of all outstanding derivatives now totals approximately $1.144 QUADRILLION.
Yeah! And soon we'll be talking about REAL money… ROFL
"It does not take a majority to prevail... but rather an irate, tireless minority, keen on setting brushfires of freedom in the minds of men." Samuel Adams
The Death Nel Rings for The
The Death Nel Rings for The Federal Reserve
http://www.nolanchart.com...
.
Wrong spot
THIS WILL SHOCK YOU!!
Protocols For Economic
Collapse In America
http://www.rense.com/gene...
That article is dated 2-23-8
That article is dated 2-23-8 but it is written as if Bush/Cheney have not yet been re-elected for their second term in office. I was thinking that maybe it was year-day-month, but from the rense.com homepage it shows their dates as being month-day-year.
The information is interesting, though.
Does anyone know if this is accurate...it's frightening as
H.E. (double toothpicks)