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it would take around $35 trillion.
Thank you melvin!  Earlier I asked how many multiples of the current money supply it would take to pay off all of the bad bets and debt.  It was not a rhetorical question.

Given how CDSs and the other derivatives are structured, is there any estimate of the total amount of debt that is being guaranteed by these instruments?  Put another way, the way things are currently structured, how many different parties will have to pay for the same defaulted debt, (the entire debt, not portions of it,) and why can we not devise a way to only pay once?

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Oct 24th, 2008 at 10:49:55 PM EST
[ Parent ]
ARGeezer:
it would take around $35 trillion.
Thank you melvin!  

well, i heard there are 32 trillion parked offshore in tax hideaways, that should cover it nicely..i'm sure we could rustle up the other 3 t. somehow, maybe taxing forex, funnelling it all through one UN-mandated portal, and skimming a cent on every dollar to be slated for micro lending and aid. the 'players' wouldn't miss it, and we'd solve the credit crunch pronto.

oh, and legalise and tax hemp too. it's a lot cheaper to get the peeps happy than to keep them tased into submission, and the authoritarians'll be able to use the cloth for all those nice uniforms they're so kinky for...

win-win, now shurrup and watch the telly like a good consumer!

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sat Oct 25th, 2008 at 08:30:56 PM EST
[ Parent ]
There isn't $32 trillion parked anywhere, not even King Fahd's mattress.  No, cash can not fix this problem.  Only hard assets can.
by rifek on Sat Oct 25th, 2008 at 09:06:18 PM EST
[ Parent ]
... A owes B, which is a credit for B which was collateral for borrowing from C, so B owes C, which is a credit for C which was collateral for borrowing from D, and so on ... the total exposure can easily be many multiples of annual income, while at the same time the net payments to service the debt is only a fraction of annual income.

Of course, late in the Clinton administration, the Democratic administration and Republican Congress set up a system where a wide range of activities were immune from regulation. And competition among for-profit financial firms will always push them to scrimp on prudential reserves "under competitive pressure" if other firms are doing the same, which is why Panics, like the Panic of 2008, are regular events in non-regulated financial systems ... cf. the Panic of 1792, 1797, 1819, 1825, 1837, 1847, 1857, 1866, and etcera.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Oct 26th, 2008 at 04:04:08 PM EST
[ Parent ]
Panics, like the Panic of 2008, are regular events in non-regulated financial systems

A fact which is conveniently forgotten too soon after the previous panic...

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Sun Oct 26th, 2008 at 05:06:53 PM EST
[ Parent ]
... followed as it was by an industrial "Depression" of nearly a decade, imprinted the risk on that generation. However, by the 1960's, those who experienced the Great Depression as adults were giving way to those who had not, and the process of ripping out the regulations imposed in the aftermath of the Panic of 1929 could begin.

Until in the US we could have a purportedly Democratic administration that was willing to trade away financial system regulation in order to pursue some small bore political successes that sounded good in speeches.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Oct 26th, 2008 at 05:10:59 PM EST
[ Parent ]

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