Comment merely gambling? (Score 1) 139
although the remark about derivatives being complex forms of gambling and a horrible waste of supposed experts in the field of physics is accurate, I thought it might be useful to point out that derivatives are much more malicious than mere gambling.
The amount of derivatives bets in the global economy is somewhere around 300 to 600 trillion dollars (the amount is not all that clear because since derivatives arent "actual" securities, they aren't made transparent under things like Fed regulationT). Its obvious that this figure is many MANY times bigger than any ACTUAL amount of equity capital to support these contracts.
In other words, we live in a horribly over-leveraged system. A credit bubble. And nobody knows when a Barings bank, an orange county, or an LTCM goes bust and takes down an interconnected banking mess which, although the finance may have less and less to do with physical economic reality, a run on banks, hyper-inflated currencies, and other shockingly possible things certainly do.
The amount of derivatives bets in the global economy is somewhere around 300 to 600 trillion dollars (the amount is not all that clear because since derivatives arent "actual" securities, they aren't made transparent under things like Fed regulationT). Its obvious that this figure is many MANY times bigger than any ACTUAL amount of equity capital to support these contracts.
In other words, we live in a horribly over-leveraged system. A credit bubble. And nobody knows when a Barings bank, an orange county, or an LTCM goes bust and takes down an interconnected banking mess which, although the finance may have less and less to do with physical economic reality, a run on banks, hyper-inflated currencies, and other shockingly possible things certainly do.
