Derivatives: Unexploded Financial Weapons

Central counterparties keep records of trades and help suck risk out of the banking system, but this only works if they themselves are well capitalised and have plans in place to deal with a sudden collapse of one or more of its members and get close to failure. Otherwise, they’re just unexploded nuclear bombs nestling deep in the financial system.   – Business Insider LINK.

Who are we kidding.  Since the 2008 de facto banking system collapse, the OTC derivatives problem has mushroomed out of control.   The Obama Government heralded in the Dodd Frank legislation, which allegedly made the financial system safer for everyone.  In reality it is nothing more than a fairlytale written with  the goal of allowing the Too Big To Fail banks to cover up their continued derivatives Ponzi scheme.

Now the BIS has issued yet another warning about the dangers lurking with derivatives. The “central clearing exchanges,” like the Depository Trust Clearing Corporation, are giant derivatives-infested vipers nest which harbors the next – and possibly imminent – financial system collapse.

This is one of the reasons behind Carl Icahn’s recent candor regarding the U.S. financial system:  “sooner or later there’s going to be a massive problem.”  LINK

In today’s episode of the Shadow of Truth,   we discuss the reasons why the BIS is sounding the derivatives alarm bell again and why Carl Icahn has become “Dr. Doom” on the stock market:

3 thoughts on “Derivatives: Unexploded Financial Weapons

  1. Dave, many thanks for the heads up in your “G & S, Patience Required” post… I put in a few trades as soon as I read it to hedge my longs and from the looks of this morning’s action it’s working out so far, will probably hold ’em till the end of next week.

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