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Old 09-09-2009, 12:45 PM   #1 (permalink)
 
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China and Derivatives... The ticking time bomb! Is this true?


I received this in an add promoting trading software... Just at of "sky is falling curiosity" does any of this resemble a possibility? What if China did default on derivatives owed to US banks? Could the US then default on Debt? Would all contracts mean nothing? Would cats and dogs begin long and meaningful relationships?






China is preparing to default on Trillions of dollars worth of derivatives sold to them by U.S. banks.

China considers the sale of these derivatives to be financial fraud and, therefore, an "act of war."

No matter who's right or wrong, China's default will have massive implications here in the U.S. if and when it comes to pass.

Let me use numbers to paint a picture for you:

Fact #1: Global GDP is around $60.1 Trillion.

Fact #2: The globe's total financial assets were around $167 Trillion as of the year 2006 -- probably a bit less today.

Fact #3: As of late 2008, the derivatives market totaled $531 Trillion -- more than 3x total financial assets worldwide.

Now you know why they say the derivatives market is a "ticking time bomb." When it blows, it's gonna blow big.

And if China defaults on the Trillions of derivatives they hold, it's bound to set off a chain reaction that will wreak havoc on Wall Street and around the entire world.

Because if China defaults, you can be sure other countries won't be far behind.

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Old 09-09-2009, 01:13 PM   #2 (permalink)
 
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This is interesting stuff. It's difficult to imagine such dimensions.
Does somebody have insights about these markets? Please share it with us!
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Old 09-09-2009, 01:18 PM   #3 (permalink)
 
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Whats Derivatives?

Forexer
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Old 09-10-2009, 09:28 PM   #4 (permalink)
 
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China is preparing to default on Trillions of dollars worth of derivatives sold to them by U.S. banks.

What are you saying, China plans on not paying their bills??

Can they do that? I suppose they can, who could stop them?

Dan.
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Old 09-10-2009, 11:56 PM   #5 (permalink)
 
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I found this blog post related to the subject. This sounds nuts.

The blog's address: FT Alphaville Blog Archive China’s derivative threat causes a stir

-Sarge
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Old 09-11-2009, 11:05 PM   #6 (permalink)
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1000,000,000,000


Thanks for the link Sarge.

Does anyone know how much a trillion yuan is in dollar terms.
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Old 09-12-2009, 11:02 AM   #7 (permalink)
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Hi G

1 Chinese yuan = 0.146456 U.S. dollars

Therefore, 1 Trillion yuan = 146 Billion USD.

Cheers
Tek
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Old 09-12-2009, 01:31 PM   #8 (permalink)
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No Small Change


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Originally Posted by Tekmnd View Post

1 Trillion yuan = 146 Billion USD.
Thanks Tek

146,000,000,000 USD is no small change.

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Old 09-12-2009, 05:11 PM   #9 (permalink)
 
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The US-China Ponzi Scheme

(here's the article)

http://articles.moneycentral.msn.com...-ours-too.aspx

(here's a quote from the article)

"Of course, it is not really in China's interest to stop the scheme, even if it wanted to, because its own economy would likewise blow up. Satyajit Das, a credit derivatives expert in Australia, likens this to stepping on one of those land mines that are activated by the weight of a victim's body. As soon as the weight is lifted, the mine explodes, and the person's leg is blown off."
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Old 09-12-2009, 05:13 PM   #10 (permalink)
 
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Quote:
Originally Posted by TrippleZero View Post
The US-China Ponzi Scheme

(here's the article)

http://articles.moneycentral.msn.com...-ours-too.aspx

(here's a quote from the article)

"Of course, it is not really in China's interest to stop the scheme, even if it wanted to, because its own economy would likewise blow up. Satyajit Das, a credit derivatives expert in Australia, likens this to stepping on one of those land mines that are activated by the weight of a victim's body. As soon as the weight is lifted, the mine explodes, and the person's leg is blown off."
http://www.reuters.com/article/ousiv...5801UT20090901

The US-China Ponzi scheme - MSN Money
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