The 1.5 quadrillion dollar derivative bubble waiting to go bust

I too could not imagine how big is 1.5 quadrillion dollars. Let’s hear what Michael Snyder said about this 1.5 quadrillion problem and what it has to do with derivatives.

“Today there is a horrific derivatives bubble that threatens to destroy not only the U.S. economy but the entire world financial system as well, but unfortunately the vast majority of people do not understand it. When you say the word “derivatives” to most Americans, they have no idea what you are talking about. In fact, even most members of the U.S. Congress don’t really seem to understand them. But you don’t have to get into all the technicalities to understand the bigger picture….

Well, the truth is that the danger that we face from derivatives is so great that Warren Buffet has called them “financial weapons of mass destruction”. Unfortunately, he is not exaggerating. It would be hard to understate the financial devastation that we could potentially be facing. A number of years back, French President Jacques Chirac referred to derivatives as “financial AIDS”. The reality is that when this bubble pops there won’t be enough money in the entire world to fix it. But ignorance is bliss, and most people simply do not understand these complex financial instruments enough to be worried about them. Unfortunately, just because most of us do not understand the danger does not mean that the danger has been eliminated….

One day some event will happen which will cause a sudden shift in world financial markets and trillions of dollars of losses in derivatives will create a tsunami that will bring the entire house of cards down. All of the money in the world will not be enough to bail out the financial system when that day arrives. The truth is that we should have never allowed world financial markets to become a giant casino. But we did. Soon enough we will all pay the price, and when that disastrous day comes, most Americans will still not understand what is happening.”

This is a chilling article of how the whole world is allowing the floating of a hot air balloon into the stratosphere and waiting for it to go bang. There are so many experts and men of wisdom who could see the danger of this monster created by the financial thugs in New York and in all western model financial centres and crying out loud. It is not crying wolf just to frighten the children. The cries and pleas are for the financial thugs to stop this scam and unwind. Unfortunately, at this point in time there is no option to unwind but to keep blowing the bubble. Any attempt to unwind would cause a panic riot and deflate the bubble just as well. It is not that they did not understand and insisting of blowing it bigger. They knew the danger and are just praying that the bubble would not go bust.

Singapore is not so daft to pretend that it did not know and did not see the danger of this gigantic bubble. No, they are pretending to be daft, pretending that if it is ok in the US and Europe, it should be ok for us. If the West is not afraid of the bubble, why should we. If we don’t join them we will miss the boat. Let’s all pretend that all is well and blow our very own derivative bubble and join the party. If it goes bust, we can’t be blamed. Is there a need to sign an indemnity or disclaimer form like after the Lehman bonds and toxic notes now before blowing the bubble? And who should be the one to sign the forms first, the people selling the derivatives, the regulators or the ‘sophisticated clients’ aka rich and stupid and did not know what the fund managers are doing with their money but have millions to lose?

Singapore has now boarded the derivative hot air balloon and enjoying the ride. It is trying to play catch up with the West by pumping more hot air and cheering as the derivative balloon gets bigger and flying higher. Higher, higher, there is plenty of room to go higher. Derivatives are the way to go, to blow the top. There is absolutely no danger of a derivative bubble bust. We know what we are doing.

Did they not see the warning signs and the calls to curb this derivative monster? What warning signs, what monster? What would happen if the derivative bubble goes bust? Oh, they have all signed the disclaimer and waiver of indemnity forms. So should be alright. Not my problem. The ‘sophisticated clients’ have all signed their licence to lose all their monies.

Heng ah!


Anonymous said...

Our CPF and National Reserves are NOT derivatives.
They are real assets.
As good as gold.
As good as the politicians who promised us.

Anonymous said...

Have you seen a mirage?

Anonymous said...

Don't worry, be happy.

Just let the super rich and elites do the worrying about what the consequences will be, if.

For the rest of us, just work eat and sleep soundly every day. You will not regret.

Anonymous said...

For most of us, our worries are about mortgage, children's education and job security.

Who cares about such absurdities as 'quadrillion' that to us mean little other than filthy lots of money, accumulated by dirty crooked people. who created all these derivatives to swindle common people and give rise to all the financial problems for the rest of the world.

Let them screw each other for all we care.

Anonymous said...

MAS and SGX, do you know what the hell are you doing, promoting derivative trades????

Anonymous said...

MAS and SGX, do you know what the hell are you doing, promoting derivative trades????
November 11, 2015 9:00 p.m.

It's not their money they are losing is it?
The last time Singaporeans lost money in mini-bonds, they say "Yew went in with your eyes wide opened".

Pay them to regulate?
Regulate what?
They only know how to ask you to serve National Service.
Do you think they know how to serve Singaporeans?

Anonymous said...

What would Yew think?