Maggie's Farm

Out of the box let me admit to not having read the articles ..yet..however this is a HUGE part of the unknown and by the way, unregulated world economic challenge.

2007 MID-YEAR MARKET SURVEY - DERIVATIVES

Notional amount outstanding of interest rate derivatives grew by 21 percent to 347.09 trillion (dollars) from $285.73 trillion. This compares with 14 percent growth during the second half of 2006. The annual growth rate for interest rate derivatives to mid-2007 is 38 percent from $250.83 trillion in mid-2006. In this survey, 88 firms provided data. All major dealers responded.

Notional amount outstanding of credit derivatives grew by 32% in the first six months of the year to $45.46 trillion from $34.42 trillion. The annual growth rate for credit derivatives is 75% from $26.0 trillion at mid-year 2006.

Notional amount outstanding of equity derivatives, which consist of equity swaps, options, and forwards, grew by 39 percent from $7.18 trillion to $10.01 trillion. This compares with 13 percent growth during the second half of 2006. The annual growth rate for equity derivatives to mid-2007 is 57 percent from $6.38 trillion at mid-year 2006.

To give you a comparison the estimates of the entire US GDP, which dwarfs all other nation is ONLY 13.86 trillion

Derivatives are not investments, they are gambles, and there exists few if any financial gurus who fully understand them.
In my world that's a whole bunch of exposed money waiting in our current environment to simply vanish,as we have seen in part from the securitized and then formulated derivatives in the housing market.

It's on helluva big exposure that NO country or countries could cover. The derivatives market needs regulations and oversight.