While the avg joe's hangover still looms, this is one that no hair of the dog is going to cure...
Happy New Year!
According to recent numbers, the top 25 banks in the United States now have a grand total of more than 236 trillion dollars of exposure to derivatives. But there are four banks that dwarf everyone else. The following are the latest numbers for those four banks… JPMorgan Chase Total Assets: $1,945,467,000,000 (nearly 2 trillion dollars) Total Exposure To Derivatives: $70,088,625,000,000 (more than 70 trillion dollars) Citibank Total Assets: $1,346,747,000,000 (a bit more than 1.3 trillion dollars) Total Exposure To Derivatives: $62,247,698,000,000 (more than 62 trillion dollars) Bank Of America Total Assets: $1,433,716,000,000 (a bit more than 1.4 trillion dollars) Total Exposure To Derivatives: $38,850,900,000,000 (more than 38 trillion dollars) Goldman Sachs Total Assets: $105,616,000,000 (just a shade over 105 billion dollars – yes, you read that correctly) Total Exposure To Derivatives: $48,611,684,000,000 (more than 48 trillion dollars) If the stock market keeps going up, interest rates stay fairly stable and the global economy does not experience a major downturn, this bubble will probably not burst for a while. But if there is a major shock to the system, we could easily experience a major derivatives crisis very rapidly and several of those banks could fail simultaneously. There are many out there that would welcome the collapse of the big banks, but that would also be very bad news for the rest of us. You see, the truth is that the U.S. economy is like a very sick patient with an extremely advanced case of cancer. You can try to kill the cancer (the banks), but in the process you will inevitably kill the patient as well. Right now, the five largest banks account for 42 percent of all loans in the entire country, and the six largest banks control 67 percent of all banking assets. If they go down, we go down too. That is why the fact that they have been so reckless is so infuriating. Just look at the numbers for Goldman Sachs again. At this point, the total exposure that Goldman Sachs has to derivatives contracts is more than 460 times greater than their total assets. And this kind of thing is not just happening in the United States. German banking giant Deutsche Bank has more than 75 trillion dollars of exposure to derivatives. That is even more than any single U.S. bank has. This derivatives bubble is a “sword of Damocles” that is hanging over the global economy by a thread day after day, month after month, year after year. At some point that thread is going to break, the bubble is going to burst, and then all hell is going to break loose. You see, the truth is that virtually none of the underlying problems that caused the last financial crisis have been fixed. Instead, our problems have just gotten even bigger and the financial bubbles have gotten even larger. Never before in the history of the United States have we been faced with the threat of such a great financial catastrophe. Sadly, most Americans are totally oblivious to all of this. They just have faith that our leaders know what they are doing, and they have been lulled into complacency by the bubble of false stability that we have been enjoying for the last couple of years. Unfortunately for them, this bubble of false stability is not going to last much longer. A financial crisis far greater than what we experienced in 2008 is coming, and it is going to shock the world. ———-
