World's Financial Markets about to come Unglued?


	World's Financial Markets about to come Unglued?

AcesLucky

2-17-2008 11:20 PM

489 views

tags:

economy, finance, credit, default, loan, globallization, global, banking, default credit swaps

AcesLucky says:

A $43 Trillion Dollar Market that most people have never heard of.

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<div style="margin: 12px 0px; font-family: arial; color: #333333; background: #ffffff; border: solid 4px #e5e5e5; width: 100%; clear: left;"><div class="CM_CTB_Content_Wrap" style="margin: 0px; padding: 0px;background-color: #ffffff;"><div style="border-bottom: solid 1px #dcdcdc; white-space: nowrap; margin-bottom: 8px; background-color: #eeeeee ;background-image: url(http://clipmarks.com/images/source-bg.gif); background-repeat: repeat-x; height: 24px; line-height: 24px; vertical-align: middle; padding-bottom: 4px; color: #666666; font-size: 10px;" ><a href="http://clipmarks.com/clip-to-blog/" title="see clips that are hot right now"><img src="http://content.clipmarks.com/blog_embed/d6756a70-89e6-4cb8-8589-c3643744f231/C8B2C216-E2F0-4BA5-AE9D-1B37AAFE6EC6/" alt="" width="19" height="19" border="0" style="vertical-align: middle; margin: 0px 4px; display: inline; border: none; float:none;" /></a>clipped from <a title="http://www.huffingtonpost.com/jacki-zehner/a-43-trillion-dollar-mar_b_86199.html" href="http://www.huffingtonpost.com/jacki-zehner/a-43-trillion-dollar-mar_b_86199.html" style="font-size: 11px;">www.huffingtonpost.com</a></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.huffingtonpost.com/jacki-zehner/a-43-trillion-dollar-mar_b_86199.html"><H1><A id="title_permalink" title="Permalink" href="http://www.huffingtonpost.com/jacki-zehner/a-43-trillion-dollar-mar_b_86199.html">A $43 Trillion Dollar Market That Most People Have Never Heard Of</A></H1></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.huffingtonpost.com/jacki-zehner/a-43-trillion-dollar-mar_b_86199.html"><P>According to Bill Gross, a fixed income market guru, the size of <A href="http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2008/IO+January+2008.htm">the credit default swap market</A> is "$43 trillion, more that half the size of the entire asset base of the global banking system." If that is not scary enough he goes on to tell is that "total derivatives amount to over $500 trillion, many of them finding their way"......................well, everywhere.</P></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.huffingtonpost.com/jacki-zehner/a-43-trillion-dollar-mar_b_86199.html">At the center of this system is a product little known outside of the world of fixed income traders and investors, called Credit Default Swaps.  </blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.huffingtonpost.com/jacki-zehner/a-43-trillion-dollar-mar_b_86199.html"><A href="http://en.wikipedia.org/wiki/Credit_default_swap">Credit default</A> swaps resemble an insurance policy, as they can be used by debt owners to <A href="http://en.wikipedia.org/wiki/Hedge_%28finance%29">hedge</A> against credit events.</blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.huffingtonpost.com/jacki-zehner/a-43-trillion-dollar-mar_b_86199.html">Credit default swaps are the most widely traded credit derivative product.</blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.huffingtonpost.com/jacki-zehner/a-43-trillion-dollar-mar_b_86199.html">The whole system is obviously based on the assumption that your counter-party can in fact make good on the trade.</blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.huffingtonpost.com/jacki-zehner/a-43-trillion-dollar-mar_b_86199.html">Bill Gross is warning of the possibility of financial Armageddon as a result of this financial pyramid scheme</blockquote></div><div style="margin: 0px 6px 6px 4px;"><table style="font-size: 11px;border-spacing: 0px;padding: 0px;" cellpadding="0" cellspacing="0" width="100%"><tr><td style="background:transparent;border-width:0px;padding:0px;">&nbsp;</td><td align="right" style="background:transparent;border-width:0px;padding:0px;width:107px" width="107"><a href="http://clipmarks.com/share/C8B2C216-E2F0-4BA5-AE9D-1B37AAFE6EC6/blog/" title="blog or email this clip"><img src="http://content7.clipmarks.com/images/c2b-foot.png" border="0" alt="blog it" width="107" height="17" style="border-width:0px;padding:0px;margin:0px;" /></a></td></tr></table></div></div>