If you won't have me as a friend, Arjay, at least have me as an amicus curiae…

Those 171 pages of the Form 10-Q can be daunting. Fortunately the nice Mr N. Eric Weiss from the Congressional Research Service has prepared an excellent 26 page report for Congress – RL34661, titled Fannie Mae’s and Freddie Mac’s Financial Problems.

http://www.fas.org/sgp/crs/misc/RL34661.pdf

I'm heartened that if the saying is true your life is bliss. Good luck with your research.

http://barnabyisright.com/2011/12/12/world-banks-707-5-trillion-derivatives-time-bomb/ Here Barnaby Joyce has quoted the Bank of International Settlements on the Derivatives Carried by all our banks.It is more than 10 times the GDP of the planet.

He wrote another article saying our bank exposure was $15 trillion to derivatives.

Suck up the truth long and hard Pericles and Yabby,because you lot will go down the toilet too.

Arjay, I'll keep it simple. There are derivatives and there are
derivatives. Let me give you an example and you can perhaps think
about it and understand them better.

Let's say I am an importer or exporter and I want to hedge the
Australian $. So I ring the bank and take cover for 100 million
Australian $ at 1.00 US $/ 1 Australian Dollar. How much money
do you think the bank actually stands to lose?

If only, Wm Trevor. If only.

>>Good luck with your research<<

Research is not a word that Arjay takes seriously, more's the pity. It would be much more edifying for us all if we were able to discuss the parlous state of the world's economy without having to indulge in speculation on such imaginary friends as the New World Order.

The irony of using Barnaby Joyce as supporting evidence is simply too rich.

>>Barnaby Joyce has quoted the Bank of International Settlements on the Derivatives Carried by all our banks.It is more than 10 times the GDP of the planet. He wrote another article saying our bank exposure was $15 trillion to derivatives.<<

Finding that Mr Joyce himself uses such sources as Money Trends Research (motto: "Trends. Finance. Corruption") only adds to the sad risibility of the exercise.

It is telling that Joyce uses the same technique as Arjay - his entire contribution is based on regurgitating an MTR article, but without any indication at all that he understands its content.

MTR does actually contain a nugget of useful information - that "soon we have to pay the mean reversion price". This is presented in such a way that it seems to indicate that we will somehow have to fork out the $707 trillion that it bangs on about, and that this will - clearly - drown the entire world economy. This is the foundation of Joyce's and Arjay's mistake.

The term is not usually employed in the derivative market - it is more common in straight stock trading circles - but it is just possible to apply it to the unwinding of derivative contracts. Which of course is an amount far distant from the gross value of the contract itself, as Yabby tried to illustrate.

Because of course the gross number includes both puts and calls...

Duh.

Too true, too true, Pericles… But for the moment I still live in hope – faint not fond.

On the plus side, I've enjoyed hours of unplanned and unexpected research into heaps of topics whose only common link was Arjay's misinterpretation.

[I now know that as of the last update the Bank for International Settlements "balance sheet amounted to SDR 255.6 billion at 31 March 2012, a decrease of SDR 5.5 billion since its financial year end in March 2011." They also own 116 tonnes of fine gold – but don't tell Barnaby.]

It still saddens me, because it has the effect that each phantom menace is a distraction from the real ones – which is why I've shared my suspicion that Arjay works for 'THEM'.

The banking system is also being irresponsible in giving enormous loans to young people with little or no deposit.This policy continues to over-inflate house prices and put these people in unnecessary debt.

The other issues are one of Govt policy who restrict the supply of land to maximise their taxes.Also the taxes/charges on developers restrict the supply of dwellings.

The RBA can and should create at least 3% of our new money to equal inflation + growth.The private banks can create another 3% via fractional reserve banking.Why borrow from foreign private banks who just create it from nothing anyway?