Another Note on Derivative and leverage.

As an addition to the blog post before I have some statistics on the amount of derivative currently in the market place.
Before the huge mortgage back derivative market of the 2000's the derivative market was averaging $80 trillion. The housing bubble drove the derivative market up to $600 trillion. It is estimated that about 60-75% of these derivatives are now worthless meaning we have about 400 trillion in derivative losses on paper. Now if that dont tell you $700 Billion wont do anything I dont know what to tell you, even if banks only hold 1/4 of these losses that $700 billion is just a bandaid on a huge deep wound.


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