The Size of Derivatives Bubble: 1.144 Quadrillion

The global derivatives market exposure is worth

$1.144 QUADRILLION.
That is $190,000 for every human being on Earth. Somehow. I don't think they are worth the hard drive space they are stored on.

Whilst outstanding derivatives are notional amounts until they are crystallised, actual exposure is measured by the net credit equivalent. This is normally a lower figure unless many variables plot a locus in the wrong direction simultaneously. This could be because of catastrophic unpredictable events, ie, "Black Swans", such as cascades of bankruptcies and nationalisations, when the net exposure can balloon and become considerably larger or indeed because some extremely dislocating geo-political or geo-physical events take place simultaneously. Also, the notional value becomes real value when either counterparty to the OTC derivative goes bankrupt. This means that no large OTC derivative house can be allowed to go broke without falling into the arms of another. Whatever funds within reason are required to rescue failing international investment banks, deposit banks and financial entities ought to be provided on a case by case basis. This is the asymmetric nature of derivatives and here lies the potential for systemic risk to the global economic system and financial markets if nothing is done.

The Size of Derivatives Bubble = $190K Per Person on Planet

Everyone remembers the post I made a few days ago showing what a trillion dollars would look like ... well a Quadrillion is 1oo trillion, trillion dollars, so imagine that trillion dollar depiction ... how many times!!!