Intriguing little throwaway line there, Rhosty.

>>...given the world is still trying to absorb 64 trillion dollars worth of worthless derivatives<<

I'm willing to bet that you haven't the faintest clue what that means.

In fact, I sincerely doubt that you know a) what a derivative is, b) where the "64 trillion dollars" figure comes from or how it was calculated, nor c) how these instruments will be "absorbed".

In fact, if they are worthless, as you assert, how will they actually affect the global economy at all?

I suspect that you just did a cut'n'paste from somewhere, on the basis that it sounds impressive.

Am I right?

Graham, empirical (as opposed to theoretical/neo-classical) economics teaches us that saved money often does not get directed towards productive investment but is often diverted toward speculative investment. During times of growing income/wealth disparity, excess savings cause asset price bubbles, because there are no productive investments able to achieve sufficient return. During times of decreasing income/wealth disparity (e.g. US/Aus 50s/60s) there are increasing numbers of consumers with sufficient purchasing power to purchase discretionary items. Hence growth and good capital returns on productive investment. During times of increasing disparity (EU/US 1920s and now) however, there are decreasing numbers of consumers with surplus discretionary purchasing power, hence lower commercial opportunities. Therefore capital will then seek returns through speculation. The only way out of this speculative spiral is to redistribute the speculative capital back into productive investment, by increasing taxation and reinvesting either through more government services or direct wealth redistribution until business sees a better return on productive investment and undertakes the investment itself. The sheer quantity of empirical evidence supporting the above explanation (see krugman, Stiglitz etc) as compared to the thoroughly debunked neo-classical theory, should have you rethinking the 2012 Labor budget as insufficiently redistributive. Unless you think economies are for maximising profits (ala Friedman) instead of overall wealth.

Pericles: I do know what a derivative is. It's money plucked from the ether by rat cunning people unable or unwilling to engage in productive effort or enterprise, in order to earn their own money. It's a modern day form of the Emperor's new clothes.
It is a form of parasitical speculation, which assumes sustained or growing asset/commodity values; and, is invariably funded with other people's money. I prefer negotiable bearer bonds, backed by actual tangible assets rather than a conga line of paper instruments, each issue reliant on the previous paper issue for its so-called value, which for mine, is only outhouse specific duties!
As for cut and paste?
Please don't apply your own flawed standards to me? I was just a bitty wee bit of a Bairn, when I last cut and pasted anything.
64 trillion in worthless derivatives, is information gleaned by actually listening to very erudite ultra ethical financial reporters like Brook and Shields, who regularly report on the American economy via SBS' afternoon news hour.
You should try Listening to the erudite and informed.
I suspect it might even be an interesting new and a novel experience?
I suspect you might actually know that reporters are obliged by legally imposed standards, to actually validate their information before going to air or print.
I also suspect, after reading many your invariability dismissive or derisory posts, that there probably isn't enough room in your house/home, for both your and your exponentially expanding ego. Am I right? You have a nice day now, y'hear. Rhrosty.

All around the world, people who plainly didn't understand that derivatives which relied on derivatives, which in turn relied on derivatives for their so called value; parted with real money for what has patently turned out to be largely worthless paper.
Millions of municipalities around the world saw larger returns beckoning; and transferred their often modest surpluses, away from traditional govt guaranteed bonds and into derivatives.
Even hard-nosed bankers/fund managers, were taken in by safe as houses mortgage securities, only to find their so-called value made literally worthless, by a bursting housing market bubble/low doc mortgages.
They patently ignored their own maxim, which goes, if you don't understand it don't invest in it; and so, around 64 trillions worth of largely worthless derivatives were bought in exchange for real money or real assets.
And that is why we now have literally millions of former self-funded retirees around the world, now eking out their retirement as govt supported pensioners. The not clever enough ultra privileged can scoff, as they are wont to; but, the uptake or sale of around 64 trillion dollars worth of largely worthless derivatives; arguably created the current financial crisis all around the world, with real money and liquidity drying up, and banks no longer able to trust each other, or remain solvent.
The speculators found that their real estate values no longer supported their speculation or housing market enterprise.
This is why a now debt riddling Europe faces the very real prospect of another Great Depression, a prospect only ever exacerbated by the conservative preferred ideology of austerity, which can only ever result in further economy damaging contraction?
Contraction which impacts most harshly on those who had nothing to do with the crisis or its creation. The most vulnerable poor or least privileged! Rhrosty

Just as I thought, Rhosty.

>>I do know what a derivative is... It is a form of parasitical speculation, which assumes sustained or growing asset/commodity values<<

You didn't even bother to look it up, did you?

If you had done so, you would have been able to deduce that it is just as likely that a derivative will be created that assumes precisely the opposite - that an asset or commodity will decline in value.

Its called "hedging". Many derivatives are created to guard against the market moving against your position - hedging your bets, in fact.

Which is of course the secret about those trillions of dollars that your reporters rabbit on about. Adding up all the face values does not equal the actual market exposure, as many of them will effectively cancel each other out, leaving only a margin that someone will gain, and someone else will lose.

Something else you didn't check:

>>I prefer negotiable bearer bonds, backed by actual tangible assets<<

http://www.investopedia.com/articles/bonds/08/bearer-bond.asp#axzz1vYmuytIu

You've been watching "Die Hard", haven't you.

Issuing bearer bonds has been illegal in the US since 1982. Finding one anywhere that is backed by "actual tangible assets" won't happen.

>>...there probably isn't enough room in your house/home, for both your and your exponentially expanding ego. Am I right?<<

I've only ever been concerned about insults directed at me by people who know what they are talking about. And quite often, not even then.

I think Rhosty is describing quite well the collapse that has occurred in the USA, and people being robbed of their financial assets here in Australia as well. His/her comments on austerity measures also make logical sense.

How about maintaining some manners on the blog, guys?