Seems that the Bank for International Settlements (BIS) just issued a short report entitled, “OTC derivatives market activity in the first half of 2011.” Should one suffering from insomnia turn to such reading for relief, the results could prove to be counterproductive. Here’s the link for a .pdf of the report should you want to draw your own conclusions whilst laying awake….
http://www.bis.org/publ/otc_hy1111.pdfCliffsNotes:
OTC = Over the Counter = UNregulated.
Definitions of the report’s terms can be found therein.
Table 1 on page 12 shows that on 12/31/2010, the total notional amounts outstanding (TNAO) was $601 trillion & some change. At the end of June 2011, this amount increased by a record setting $107 trillion to $707 trillion & change, while market value decreased.
Could it be that in order to satisfy what likely threatened to become a self-feeding margin call as the 12/2010-reported $600 trillion derivatives market collapsed on itself, banks had to sell evermore derivatives in order to collect recurring and/or upfront premia and to pad their books with Generally Accepted Accounting Principles (GAAP)-endorsed delusions of future derivative-based cash flows?
Could this also be the basis for the banks reporting significant *profits* in the first half of this year?
Make ya wonder what their off-balance sheet losses (unregulated/derecognized transfers) look like?
Given the present rate, could this TNAO increase to $1 quadrillion by 2012?
Isn’t the world’s GDP somewhere ‘round $63 trillion?
Didn’t BoA and JPM recently transfer ‘round $150 trillion of notional derivatives from their investment banking divisions to their FDIC-insured depository institutions containing your savings/checking accounts?
http://www.bloomberg.com/news/2011-10-18...-bank-unit.htmlhttp://problembanklist.com/fdic-to-cover-losses-on-trillion-bank-of-america-derivative-bets-0419/What will happen when this fission-like global margin call inevitably occurs between the counterparties and their insurers?
Sweet dreams in Wonderland….
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