dwot (99.50)

Interest Rate Derivatives

April 22, 2010 – Comments (2)

It has been about three and half years since I first learned the word "derivatives" as applied to financial markets.  At the time when I asked around no one I knew had heard of them or had any idea as to what they were and searches on the internet on them yield few results.

At the time there was around $400-500 trillion dollars of them.  The sheer number simply changed my focus.  That number simply stands like a tower next to an ant in terms of the real economy and begs the question, how can a "fake" economy be worth so much and what does this mean to the real economy.  I could not see how it could possibly be good.  A small portion of it has exploded with huge implications to tax payers, but what of the rest of these of these things?

As in this post on Naked Capitalism, I have thought they are a ticking time bomb.  I think the wealthy and pensions are in for another huge hit.