Wall Street Journal Bank Rules Get Fresh Look: In Victory for Lenders Regulators to Make it Easier to Meet Liquidity Targets. by David Enrich and Victoria McGrane
[Excerpt] "International regulators are poised to ease a core element of new banking rules that were designed to improve the safety of the financial system....
Following months of intense industry pressure, regulators say they now plan to make it easier for banks to comply with a key provision of new international banking rules that will require lenders to maintain sufficiently deep pools of safe, liquid assets - like cash and government bonds - that can survive market meltdowns and other crises." [end quote]
Majia Here: The Basel accords, the rules at issue here, would result in an estimated $2.22 trillion shortfall for global banks if implemented immediately.
A couple of years ago I attempted to verify the amount of outstanding derivatives with the Bank of International Settlements’ data for 2009 published in the June 2010 Quarterly Review (pp. 121-126 http://www.bis.org/publ/qtrpdf/r_qa1006.pdf).
I totaled the numbers provided in the BIS tables for derivatives to $5626883 in billions.
Wayne Madsen uses data from the U.S. Federal Reserve Bank to put the total outstanding derivatives value in the quadrillions (2010, http://onlinejournal.com/artman/publish/article_5586.shtml) and notes that “DK Matai of the Asymmetric Threats Contingency Alliance notes that a conservative 10 percent default or decline could result in $100 trillion of payouts.”
Although these numbers are simply unintelligible, it is clear that the notional value of derivatives outstanding exceeds the world’s GDP exponentially.
Outstanding derivatives are the reason the corrupt regulators are not going to impose the Basel rules as originally designed.
Derivatives, such as futures purchased by airlines and farmers attempting to hedge uncertainty in future prices of fuel and grain, make sense.
However, most of the derivatives contracts that exist today are simply rent-seeking opportunities by players with no stake in the underlying commodities.
To repeat: Credit default swaps, collateralized debt obligations, and similar exotic derivatives are largely/primarily RENT SEEKING and have NO PRODUCTIVE VALUE and DE-STABILIZE ECONOMIES.
My published essay on this subject can be found here:
One of my posts describes the predatory nature of global banking today in some detail
For background on how this deplorable economic and political state emerged see here: