The Ticking Derivatives Time Bomb

Neither the US nor international regulators did anything meaningful to defuse the derivatives time bomb:

Weren’t derivatives the very items that caused the 2008 Crisis? And wasn’t the problem with derivatives that they were totally unregulated and out of control? 

And yet, here we find, that in point of fact, all of us must continue to earn next to nothing on our savings because if the Fed were to raise rates, it might blow up Wall Street again … 

Simply incredible and outrageous. 

What’s even more astounding is that Hilsenrath is in fact understating the issue here. It’s true that there are $12 trillion worth of derivatives contracts related to the fed funds rate… but total interest rate derivatives contracts are in fact closer to $192 TRILLION. 

And that’s just the derivatives sitting on US commercial bank balance sheets. We’re not even including international banks! 

So … the US economy is allegedly in recovery … the financial markets are fixed … and all is well in the world. But the Fed cannot risk raising interest rates to normal levels because Wall Street has over $12 trillion (more like over $100 trillion) in derivatives contracts that could blow up. 

That sure doesn’t sound like things were fixed to us. If anything, it sounds like the stage is set for another 2008 type disaster.

http://www.zerohedge.com/contributed/2014-05-19/12-trillion-ticking-time-bomb

"Too big to fail" doesn't mean they won't.

We should have let them all fail, and we should be putting bankgangsters in jail instead of persecuting the homeless, the aged, the sick, and the hungry.