Here's a little table I put together with numbers from the OCC -- page 9 of this pdf. Using second-quarter numbers for each year, I looked at the total nominal derivatives exposure of end users -- the people for whom derivatives are meant to exist -- and for dealers. The results are pretty startling: while end-users have pared their derivatives exposure to a seven-year low, dealers have increased theirs to yet another all-time high. And as the OCC notes, when we say "dealers", we really mean four banks in particular: JP Morgan Chase, Goldman Sachs, Bank of America, and Citibank. Oh, and did I mention? The amounts here are in trillions. Year End Users Dealers Ratio 2003 2.6 62.4 24.0 2004 2.5 76.9 30.8 2005 2.5 96.2 38.5 2006 2.6 110.1 42.3 2007 2.6 138.1 53.1 2008 2.8 163.9 58.5 2009 2.4 187.6 78.2 What has happened in recent years that derivatives dealers now need $78 in nominal derivatives exposure for every $1 in end-user exposure? When Adair Turner talks about "profitable activities so unlikely to have a social benefit, direct or indirect, that [banks] should voluntarily walk away from them", this is surely a prime example of what he has in mind.
The results are pretty startling: while end-users have pared their derivatives exposure to a seven-year low, dealers have increased theirs to yet another all-time high. And as the OCC notes, when we say "dealers", we really mean four banks in particular: JP Morgan Chase, Goldman Sachs, Bank of America, and Citibank.
Oh, and did I mention? The amounts here are in trillions.
What has happened in recent years that derivatives dealers now need $78 in nominal derivatives exposure for every $1 in end-user exposure? When Adair Turner talks about "profitable activities so unlikely to have a social benefit, direct or indirect, that [banks] should voluntarily walk away from them", this is surely a prime example of what he has in mind.
What has happened in recent years that derivatives dealers now need $78 in nominal derivatives exposure for every $1 in end-user exposure?
WTF?
Why aren't these peoples' heads on metaphorical democratically-sponsored pikes yet?
"profitable activities so unlikely to have a social benefit, direct or indirect, that [banks] should voluntarily walk away from them",
what values of profit are so low that a bank would walk away from it ? We know that the music is playing, we know that profit is made and we now know that if the music stops, they'll come cap in hand to us and our lords and masters will cough up.
they have to be stopped; forcibly, because they themselves see no reason to stop. But our elites are so easily bribed and lack the insight to see that which any 5 year old could see keep to the Fen Causeway
