Monday, April 16, 2018

Deadly Parasitic Quadrillion Dollar Derivatives

The opening of a canal in 1848 led to the birth of modern financial derivatives, and the early demise of some of the men who traded them according to Michael Durbin, author of the article, Death by Deriviatives, a damned interesting read.

Ever since 1848, when speculators--or “plungers” as they were then known--at the Chicago Board of Trade, where traders negotiated contracts for the future sale of wheat and other such goods, derivative traders have been very busy creating an intricate web of deceit. Derivative trades have grown exponentially. The scale of today’s unregulated,  off-balance sheet derivatives market, now measured in quadrillions of dollars, is too vast to comprehend as it defies anything on a human scale. It is larger than the entire global economy! How can that be? Derivative traders, essentially gamblers, can bet as much as they want. They can bet money they don’t have.

It's not only almost impossible to wrap our heads around such meaningless numbers; it is impossible to understand the sophisticated software that makes the derivative market the boundless and incomprehensible behemoth, or  mountain of "financial weapons of mass destruction" that it is.
That's because high frequency trading software executes thousands of bets per second on the future prices of everything and/or anything you can possibly think of.  Thousands of bets per second? The human mind cannot do thousands of anything per second. Not to mention, the overly complicated financial instruments--investments in investments, bets about bets--that are so complex that the "quants," the alchemists of Wall Street, themselves, the ones who designed them in the first place, can't explain or even begin to unravel.

Make no mistake, buying derivatives is not investing in anything. Not only do derivatives create nothing, they only serve to enrich-parasites- NON-producers at the expense of the people who do create real goods and services. So thank you, Alan Greenspan, for obeying your puppet-masters and legitimizing and actively promoting a huge black hole that, as far as I'm concerned, ONLY exists-black holes, that is- as an evil construct to transfer the real wealth of the people to our ruling elite.

Please, keep in mind the derivatives bubble was at the heart of the financial crash in the 2008 and the only thing that's changed since 2008 is that this huge bubble had grown exponentially.  97% of derivatives are held by the five largest, too big to fail commercial banks: JPMorgan, Bank America, Citibank, Wachovia, and HSBC. In other words, the powers that be not only refuse to put out the proverbial fire that burns beneath the financial industry that crashed our economy in 2008 they're fueling it for all its worth.

 The bottom line: it's a misleading thing to pretend that this amount of money actually exists in anything but the ever-shifting virtual world of  bits and bytes. However, the all-powerful and ever-mysterious they know the mind-blowing numbers they throw at us will...well, blow our minds and isn't that the point?

Ironically something which was created to supposedly manage risk has instead risked our ability to manage anything at all.


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