Let’s look at the facts: The value of global derivatives contracts now exceeds more than one quadrillion dollars. People can’t even understand the magnitude of it. One of the reasons regulators everywhere have been so insistent that banks raise their capital or liquid cash on their balance sheets is to try to be prepared for the next derivatives crisis.
Boldfaced emphasis added by me.
Anyone surprised by that figure wasn’t paying any damned attention back in 2008 when I tried to spread the word.
“Magical finance” has kept everything mostly afloat. But the cracks in the boat are beginning to appear again. There are only so many ghost cities and factories China can build or keep afloat.
And I don’t think millions of Americans would put up with another wave of housing evictions and foreclosures. Not in the current climate where people understand just how brutal and nearly-renegade the police have become.
I’m not going to reiterate all the ways we’ve been screwed since 2008. I did that back in 2008 and in a few posts here since (see Collapse or Pottersville Categories in right sidebar).
What I see as a very frightening move is the one by Citibank to offload exposure — read: collapse — of their derivatives onto on the FDIC, meaning all of us. Citigroup should have been broken up back in 2008. Glass-Steagall should have been made the law of the land again.
But that never happened. The corruption throughout the political and financial system is too great.
All we do now is wait to see what erupts where and if it can be stopped with the wave of a new magic wand.