Over One Quadrillion Dollars in Derivatives

That is greater than the value of all things on Earth.

The unravelling of these derivatives could eat up all wealth.

And the $700 billion bailout now before Congress will be a joke if this derivatives bubble were to suddenly burst.

http://www.gold-eagle.com/editorials_08/demeritt061608.html

The Bank of International Settlements recently reported that the amount of
outstanding derivatives has now reached the $1.14 quadrillion mark ($548
Trillion in listed credit derivatives plus $596 trillion in notional [or face
value] OTC derivatives)....

Derivatives, as you may know, are essentially unregulated, high-risk credit bets. Unlike the earnest farmer who might employ a futures contract to hedge the price of the beans he’s worked so hard to grow, many of today’s institutions use futures, forwards, options, swaps, swaptions, caps, collars and floors—any kind of leverage device they can cook up—to bet the hell out of virtually anything.

What drives derivatives, at their very roots (if you can somehow get back that far), are base assets that get leveraged to a demented degree. Martin Mayer writing for the Brookings Institute, said, “the receiver of the payments on these loans or securities has bought the securities for the duration of the swap on 95% margin, even though the law says nobody can buy securities without putting up half the price.”

Extrapolated, $1.14 quadrillion in assets “owned” on something like 95% margin has to be one of the scariest phenomena in economic history....

Eventually, shockingly, something will happen. Some bank will slip up, some mathematician will miscalculate or the Fed just won’t react fast enough, and the whole [$1.14] quadrillion derivative complex will come tumbling down around our feet. Only it might not be [$1.14] quadrillion by then. It might be a whole lot more.

Resplendent Rant!

To begin with Hank Paulson, Ben Bernanke and Alan Greenspan among countless other criminals. Once Goldman Sachs was threatened, Hank pulled out the big bazooka, aimed it at the American taxpayer and pulled the trigger. These glorified captains of free market capitalism took every bit of risk and moral hazard inherent in the unregulated derivative minefield and jammed them right up our ass. I think George Bush, Barney Frank and Chuck Shumer got a few calls from their "base", demanding protection of their mansions, villas, Bentley's and cocaine. The CONSEQUENCES for this economic rape? None. AIG's Willumstad walks away with $7 million among numerous others. Like I said, right up the ass. We are on the hook for these losses to the tune of a minimum $500 billion. Remember when they told us the genocide in Iraq would only cost $50 million? $10 billion a month, $555 billion to date. It boggles the mind. On top of socializing the consequences, these corporate fascists changed as many of the "rules of the game" as they felt necessary to prevent the further loss of their own capital. Stock shorting was suspended on a triple witching hour day, read: drop dead to hedge funds and their short traders. When you make us rich we love ya, nothing more than a convenient scapegoat when losses mount. The SEC (Socializing Economic Crashes) suspended a bunch of other RULES to grease the wheels that is creating the Dow surge and corporate warm and fuzzies this morning. The numbers being thrown around are astounding, numbers that don't matter anymore.If these "people" think that they will be able to live happily ever after destroying our lives they are mistaken. As millions of Americans are thrown under the bus, losing jobs, homes, life savings and begin to starve, our violent human nature will take over. This violence will be directed at the people responsible, regardless of the number of Blackwater type folks they handsomely pay to protect them. There have been many prior posts here referring to ammo purchases at WalMart ect. in preparation for TLE, presumably for hunting and self defense. I humbly suggest a significant portion of these ammo purchases will be used for revenge and the ultimate settling of accounts. When TLE eventually does come to pass, there will be no mistaking the true baser instincts of human beings. Here on this blog we discuss all of the possible effects of the crashing oil economy and how we will grow basil, transform front yards into gardens and barter for survival. The FBI estimates(1997 data) that there are over 200 million privately-owned firearms in the US, 12 guns for every man, woman, and child in the country, millions of rounds of ammo, back in 1997. We've stocked up a bit since then to a tune of 4.5 million guns a year. That's a minimum of 250 million weapons, including almost anything the military has in the hands of Joe Six Pack. When you look at America's history it is painfully obvious that when push comes to shove, we have absolutely no qualms about taking what we need to survive and bombing, shooting and killing anyone in the way. We have all referred generically to the fact "millions will suffer during TLE." A clearer, more concise description would be that we will first kill the people most responsible for our situation and then kill each other to survive, our history and human nature being what they are. It will take years and decades if ever, to reach the point where we are singing Kumbaya, churning butter, dancing in barns and living in the world JHK envisions in World made by Hand. The Treasury Sec. may have taken the first shot. The people, as they did in the American Revolution, will have the last. Catch ya later, there's a hunting sale at Big 5. Sorry folks, anyone who shops at WalMart REALLY doesn't give a fuck about this country. America's biggest corporation creates its wealth exactly like the rest of Wall Street. WalMart xternalizes and socializes their expenses and produces everything they sell on the backs of the poor and powerless. Period. When you shop at WalMart, you directly support the ass fucking we are taking at this very moment. Nuff said...

Posted by: djcrow22 September 19, 2008 at 12:54 PM

http://http//jameshowardkunstler.typepad.com/clusterfuck_nation/2008/09/a-ripe-moment/comments/page/15/#comments

Storm Surge in Galveston Higher than Reported

Yesterday, the highest storm surge reported was 11 feet at Galveston and 13-1/2 feet in Galveston Bay. Turns out, the surge was, apparently, higher than that in places.

http://www.nola.com/hurricane-ike/index.ssf/2008/09/in_galveston_homes_underwater.html

Snip

GALVESTON, Texas - Hurricane Ike's winds left behind a barrier island city more than three-quarters submerged in water and riddled with house fires that were still spreading in late morning.

A vast western stretch of the island outside of the thick concrete seawall remained completely impassable, and many interior subdivisions experienced flooding. But as winds and surges died down, waters were receding noticeably.

At the height of the storm, residents of the city's downtown and "Strand" district, reported flooding reaching the second floors of some buildings.

Snip

Ike's strongest storm surges forced the Rushing family out their first-story window and onto their 17-foot speedboat. The family of six dodged submerged dump trucks on a 20-block odyssey to the San Luis Resort, a safe haven where media and city officials were riding out the storm.

Submerged dump trucks, eh? Those things are about 12 feet high. Add 2 or 3 feet for the typical barrier island roadway elevation and you get 14 to 15 feet.

City Manager Steve LeBlanc said helicopter fly-overs by state officials have been the only source of information about the island's west end, home to a slew of raised beach houses and subdivisions that make up 47 percent of the city's tax base.

"We can see there are rooftops," LeBlanc said. "As far as getting there and getting to them, there's just no way to do it."

Debris covers the I-45 Causeway Southbound.

http://images.chron.com/photos/2008/09/13/13012081/600xPopupGallery.jpg

Here's an overview of the damage. The surge still didn't overtop the seawall (except maybe at low spots), which saved all the resort hotels and luxury sea view condminiums that were on land.

http://link.brightcove.com/services/link/bcpid823433113/bctid1785350224


But debris did get over the seawall in some places but didn't make it past the sidewalk across the street.



http://images.chron.com/photos/2008/09/13/13009273/600xPopupGallery.jpg

JPMorganChase Tower, Other Skyscrapers Damaged in Houston

The streets below are littered with computers, post-it notes, confidential files and pieces furniture.



Video here. http://cosmos.bcst.yahoo.com/up/player/popup/?rn=4226712&cl=9718347&src=news

In Galveston, the damage is not as bad as feared (11-foot storm surge against a 17-foot seawall). Maximum reported storm surge anywhere along the cost is 13-1/2 feet. Looks like we got off lucky; maybe the refineries will start up soon and gasoline prices will come on down.

So how come the reincarnetion of Dwight D. Eisenhower didn't leave the Houston oil infrastructure totally wrecked? Who knows???

General, President and now HURRICANE Dwight D. Eisenhower

Americans really liked Ike back in the 1950's but not as much as we embraced the Military Industrial Complex --- it enabled out Happy Motoring! lifestyle for far longer than it could have been sustained otherwise.

Well, he WARNED us of the MIC in his Farewell Address (1960-61). But did we listen and take heed? NoooOOOOOooooooo-o! So now he's back and he's sorely pissed and he's headed for HOUSTON: capital of the US oil industry!

http://www.drudgereport.com/

I don't agree with Matt Drudge's politics, but his link set can't be beat when it comes to Ba-a-a-a-ad tropical storms!

CIA Quashed FBI Terrorist Investigations.

Result? 9-11 happened. No joke. Damn it.

http://www.marketwatch.com/news/story/significant-new-information-details-cia/story.aspx?guid=%7BFBC51EE0-675F-4C4B-9FB1-DBA2CBE39FE1%7D&dist=hppr

We are SO Screwed!

Courtesy of David Letterman.

http://www.huffingtonpost.com/2008/09/09/david-lettermans-global-w_n_125090.html

Quelle Scandale!!!

Wide-Ranging Ethics Scandal Emerges at Interior Dept.

http://www.nytimes.com/2008/09/11/washington/11royalty.html?_r=1&oref=slogin&ref=business&pagewanted=print

WASHINGTON — As Congress prepares to debate expansion of drilling in taxpayer-owned coastal waters, the Interior Department agency that collects oil and gas royalties has been caught up in a wide-ranging ethics scandal — including allegations of financial self-dealing, accepting gifts from energy companies, cocaine use and sexual misconduct.

In three reports delivered to Congress on Wednesday, the department’s inspector general, Earl E. Devaney, found wrongdoing by a dozen current and former employees of the Minerals Management Service, which collects about $10 billion in royalties annually and is one of the government’s largest sources of revenue other than taxes.

“A culture of ethical failure” besets the agency, Mr. Devaney wrote in a cover memo.

And this has been going on for much of the Bush Administration! X(

Change two letters in "Palin" and you get "Putin."

Only the Alaska governor is not nearly as smart. Not by a long shot.

http://www.laprogressive.com/2008/09/05/alaskans-speak-in-a-frightened-whisper-palin-is-%E2%80%9Cracist-sexist-vindictive-and-mean%E2%80%9D/

And allegedly, she also has supported secession for Alaska. If Alaska were to secede, Vladimir Putin would not hesitate to gobble it up like candy! And where would Sarah be then?