US banks derivatives exposure

Derivatives can be seen as a global financial casino at which big banks on Wall Street and the like can make billions if they make the right bets. As in any good casino, they can also make massive losses if they make the wrong bets, but luckily for them, they simply get bailed out by governments (i.e. taxpayers) every time they are in danger of going broke. Due to the outrageous unearned profits that can be made in this casino, the derivatives market has grown grotesquely huge over the last couple of years. Here is a visualization of the American share.

 

3 thoughts on “US banks derivatives exposure”

  1. I know I asked you to do this (illustrate the size of the derivatives market on the same scale) but, I am not sure that I am grateful that you have done so. This problem is so huge, it is simply breath-taking. In medieval times, Cathedrals were built to deliberately evoke this reaction – to point to the awesomeness of God. Today, most people in developed nations are like vampire’s avoiding looking in the mirror. Unfortunately, the reality of the situation does not change simply because we choose not to look at it. Thanks for all the time you have spent putting these thoughts and illustrations together so effectively.

    1. Yeah, our world is a rather strange mix of perverse incentives and ignorance. The select few who know how to play these totally unethical financial instruments probably know that they are hurting society, but are just driven forward by the tremendous unearned profits which are available. But this would not have been possible if the general public were not so woefully ignorant regarding these issues. If everyone understood these things, we would see perpetual protests that make occupy Wall Street look like a picnic.

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