Number of the Day....."Derivatives"

Serhan Cevik / Morgan Stanley has put up some scary derivatives numbers. As seen in the rmbs related derivatives there is potential for major trouble. Just ask Bear Stearns :-)

Serhan Cevik von Morgan Stanley hat hier einige furchteinflößende Zahlen zu Derivaten zusammengetragen. Wie gerade zu bei den an die US-Hypotheken angelehnten Papieren zu sehen verbirgt sich gewaltiges Gefahrenpotential. Fragt mal bei Bear Stearns nach :-)

The volume of derivative contracts on a variety of assets increased from US$5.7 trillion in 1990 to US$415.2 trillion last year. Put differently, the total amount of exchange-traded and over-the-counter derivatives snowballed from 26% of global GDP to an astonishing 789%

As a result, the proliferation of these complex instruments — with abbreviated names like CDO, CDS, CLO, CPDO, CDS of CDOs, CPPI and LCDS — has become a major source of credit expansion and has decoupled market liquidity from monetary tightening. Indeed, derivatives and securitized debt instruments account for almost 90% of global liquidity, while ‘traditional’ monetary aggregates represent a mere 10%.

This explosive expansion is not just a result of financial innovation, in our view, but reflects the emergence of new players with greater appetite for leverage and ‘positive feedback’ from the moderation of volatility in recent years.

For example, the number of hedge funds increased from 300 in 1990 to more than 10,000 today, with an unlevered asset pool of about US$2 trillion under management and accounting for 60% of the trades in derivatives.

>Whenever i read numbers like this this video comes to mind

>Ich kann mir nicht helfen, aber immer wenn ich Zahlen wie diese lese muß ich an dieses Video denken

Dank an Zeitenwende