"CRUDE" oil, an absolute must see program !!!

China has an interest in Iran... I wonder how they will deal with that?

 

Bugger, Aussy goes up, US$ goes down gold in AU$ does not move - - - WTF?
Then Aussy goes down US$ goes up and gold in AU$ is still the same - - I do not think I am good at playing this game just balance my spread and sit (or ****) as things unfold

Gold in AU$ is flatlined????? from about 13:15 NY time... Please explain?

 

My brother (a stockbroker) always expained the market only runs on
fear and greed

 

They are probably talking about certain CDO's like Mortgage Backed and they are probably talking about "market value" i.e. the theoretical maximum exposure given their models. Like say if you are short a put option, your exposure is the value that you can trade out of the position on any given day. The problem comes in when the markets are illiquid, as many of these are, and the values of these instruments are determined by "marked to model" of "marked to make believe" as it has become known. The day you need to trade out if there is no market, or buyers at well below your model price levels, the real exposure becomes much bigger and in the case of default the full notional value. Thats my understanding at least...

The notional value of all outstanding derivatives now totals approximately $1.144 QUADRILLION... if large defaults occur in this market the cascading knock on would be very hard to stem. The leverage is such that one default could easily destroy the balance sheet of a counter party and precipitate default which in turn will hit all their counter parties and so on. Where that stops is anyones guess because the market is so arcane, anyway they seem very reluctant to see it tested for understandable reasons. I best heard it described as one domino hitting two which hit two and so on... i.e the potential here, as described to me, is exponential not linear.

The thing is that no one really knows for sure, they just know its massive and its teetering like an upside down pyramid. Considering how underrated the impact of the "small" sub-prime market was this one is truly terrifying.

Cheers
Beanz

 

With that I will concur, I suppose that is why I am confused? - - How many zeros in quadrillion? - - I have the zeros - - Anyhow, have a chockie biscuit to celebrate my entry somewhere??????

 

Short term I'd agree, long term it shakes out along the lines of the fundamentals. We certainly have fear around at the moment as the good stuff is going as cheap as the rubbish, but hey who am I to complain.. its been a sale.

 

This was in 2003... but its an example of how Trillions are counted as Billions

Once counter parties fail the sums start to change... a bit like your theoretical exposure to a motor accident involving a spinal injury, the $500 excess... until you find the insurance company just went bust... and coincidently so did you...

This remains true but the numbers are bigger today... JPM has about 92T now, see attached table.

It is mind blowing... the US is about a 14T economy to put it in perspective... this is one insanely large pile of paper!

 

Geees Heinz those numbers make telephone numbers seem very small

Thanks for your patience and understanding - You should be an academic as you would excel there.....

 

Here Mas, see if this helps....

http://www.kokogiak.com/megapenny/default.asp

 

I used to work in IT for WestMerchant Bank in London whilst it became WestLB due Russian defaukt of only 10 to GBP15 million trades that the boss refused to allow the desk to sell out of and said we will hang onto them.....well that lasted about 10 days until it used up all the cash the bank had and the BOE said what now...so we changed business cards and the new sign out the front and a German came over to run the office.

 

Academic ? LOL every time I learn something I always find a gotya... the more I know the less I know, I know.... I'm still hoping for a massively positive gotya here... just have not found it yet... not for want of trying...still looking

 

Shades of LTCM...?

 

LTC had a perfect model didn't they right up to when 300 yrs of history failed them.
Remind me who paid the bill for that one?

 

Funny U should mention that.. just reading this..

You'd have to say the customers of the banks that bailed... Seems these days we don't stuff around we just stick a gun up the nose of the tax payer and say this is for your own good.

P.S. I'm in shock JPM has reduced derivative exposure to a smidge short of 90T, damn! Must be a credit crunch! I'd like the smidge in my account

 

The thing i like about Derivatives is the guy who creates and or sells them get his salary and bonuses but when the **** hits the fan sooner or later a dervative can kill a bank stone dead but the guy that invented it is on his yacht?

I'm with Buffet..'weapons of mass financial destruction'
I remember him buying some small insurance company that owned some and he said with all the clever buggers he employs they cant work out a value for them..are they assets or liabilities?