Credit Derivatives Double in a Year

When I need insurance, don't know what the future;
System could blow any day;
Baby, I go crazy;
If all those derivatives can't pay;

Doubling derivatives, all in one year now;
Someone tell me, what is the crime;
Honey, got no money;
But still, please rooooooll me,
and call me the tumbling dice;;


With the credit crunch intensifying, the one financial market that continues to increase, is the credit derivative market, according to a report issued today by the Bank for International Settlements. Credit derivatives, which are essentially insurance policies to protect speculators against defaults on securities, rose from $20 trillion in June, 2006, to $43 trillion in June 2007.

Since all of the major derivatives banks are already bankrupt, the idea that they can insure each other against defaults is ludicrous. The BIS also reported on the size of the global derivatives market, which, it said, has increased by 35 percent in the 12 months ended in June, 2007, jumping from $454 trillion to $613 trillion. The real numbers are likely much larger, the sum total of all derivatives bets is undoubtedly measured in quadrillions. And when it finally goes, that will be the real crash to end all real crashes. Your ARM Mortgage may be bad when balloons upward in monthly payments, but if this larger crap goes on, where will you get a job?