Is it safe?

Just when you thought it was.

Wall Street has been making money, tens of billions in a year, buying and selling derivatives.  These are risky loans that have an insurance policy issued to cover the loss in the event of a default.  Much like a small Florida insurance carriers though, they have no prayer of ever paying much of anything back in the event that a hurricaine actually DOES score a direct.  They will instead crash and burn, going tango-uniform themselves, leaving most of the loss uncovered.  (Warren Buffet called derivatives fiancial weapons of mass destruction).

The folks that have been running the show and collecting their big salary will keep all of that and their bonuses.  They will just close the doors of the building they have been operating out of.  Won’t really  matter because using dollars to conduct business will come to an immediate, uncomfortable, crash-and-burn halt.  The credit cards stop working.  The ATMs stop working.  All of a sudden those small business owners that we deal with every day will be faced with the idea of taking worthless or near worthless dollars. Or bartering.  The government will institute draconian regulations that people MUST take dollars to do business.  And people will find ways to get by and get around it.  Eventually.  And we may find that those folks who had the paranoia to actually buy stuff like gold and silver and shotgun shells are temporarily be very comfortable.

Surely it’s not that bad.

How bad is it?

They have been buying and selling these derivatives around the globe and involved the banking and economy of almost every country.  When it collapses (say when something happens like Greece defaulting), the amount that comes instantly due is something like on the order of…

$1.5 quadrillion.

That’s a little over 23  times the total GDP of the world.

Or another way of putting it:

All the money in the world.

Times 23.

Sleep well.

About drrik

3rd career and 2nd childhood. Spends spare time repairing old things. Aspires to burn more gasoline, gunpowder, and ink in pursuit of slowing down. Child of the 60s and aspiring student of history. No desire to see us repeat the failed social experiments that keep failing for lack of human beings that meet the left wing standards and have to be killed off. Did engineering long enough to realize that very little is new and the wheel does not need to be reinvented.
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