The Bankwatch

Tracking the consumer evolution of financial services

The End Game | Raoul Paul

There is much talk about the end of things as we know it.  Raoul Pal founder of Global Macro Investor “previously co-managed the GLG Global Macro Fund in London for GLG Partners (ht ZeroHedge) and wrote this straightforward piece..

The single piece of evidence in this piece is one that I have mentioned here often.  That is the $600/ 700 trillion in derivatives that exist.  The set of financial hedges that represent 10 x world GDP.

Right after the crisis began there was much talk and effort focussed on unwinding those contracts. not only did that not happen, they have grown from 600 then to 700 now.  

We just had JP Morgan announce a mark to market loss of $2Bn related to derivative risk of about $100 trillion.  It is illustrative that by holding about 17% of world derivatives in on institution we can easily view the extent of the risk.  However the fact that the rest is spread across multiple institutions is no particular security blanket,  The amount is so large and all banks capital is so low, a whisper in this market will create a domino effect.


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Written by Colin Henderson

June 1, 2012 at 22:08

Posted in Uncategorized

7 Responses

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  1. ‘your either part of the solution or part of the problem’ ……. latter applies here.

    The Scot Bicycle

    June 2, 2012 at 13:55

    • So what is the solution? Its too easy to blame finance. At least he is identifying a core component of the problem and which is exacerbated by likes of JPM.

      Colin Henderson

      June 3, 2012 at 18:07

  2. Solution is to use your vote carefully. Choose people who are willing to think and decide analytically rather than wealth driven ideologues.
    If the best young brains in the west are drawn towards designing derivatives instead of designing say new energy technologies then the world is not going to ‘grow’ and we will continue to be jeopardised by these self styled masters of the universe.
    On a lighter note there was a similar hysteria built up around the ‘millennium bug’ except in Italy who didn’t worry about it, they have seen the rise and fall of an empire.

    The Scot Bicycle

    June 4, 2012 at 04:14

    • …and Italy’s in SUCH wonderful financial shape now…


      July 2, 2012 at 07:25

    • Lol vote for who they’re both the same vote just a different colour , blue fascism or red fascism

      Steven Kelly

      July 8, 2012 at 10:31

  3. Ouch! I better find my tin helmet. And convert all that stinking paper to gold.


    June 4, 2012 at 21:54

  4. Ddog .. indeed! The extreme views have never come through, so far!

    Colin Henderson

    June 5, 2012 at 22:53

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