Tuesday, 11 March 2008

Buffett and Gross Warn: $516 Trillion Bubble is a Disaster Waiting to Happen

"We try to be alert to any sort of mega-catastrophe risk, and that posture may make us unduly appreciative about the burgeoning quantities of long-term derivatives contracts and the massive amount of uncollateralized receivables that are growing alongside. In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal."
------------------------------------------------------------------------
To grasp how significant this five-fold bubble increase is, let's put that $516 trillion in the context of some other domestic and international monetary data:

-U.S. annual gross domestic product is about $15 trillion
-U.S. money supply is also about $15 trillion
-Current proposed U.S. federal budget is $3 trillion
-U.S. government's maximum legal debt is $9 trillion
-U.S. mutual fund companies manage about $12 trillion
-World's GDPs for all nations is approximately $50 trillion
http://www.marketwatch.com/news/story/derivatives-new-ticking-time-bomb/story.aspx?guid=%7bB9E54A5D-4796-4D0D-AC9E-D9124B59D436%7d&print=true&dist=printTop

Humans have always been a great deal more intelligent than wise. When risk factors are thrown out the window, people will engage in all manner of dangerous finanical actiuvities inorder to get flithy rich.


[Posted at the SpookyWeather blog, March 11th, 2008.]

No comments: