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I have seen estimates that the actual value of the world wide $700 trillion derivative bubble is about $20 trillion. That is about 3.5%. Apply the same ratio to the $53 trillion BOA derivative exposure that just got transferred to the deposit taking part of the holding company with Bernanke's blessing and that becomes $1.85 trillion.

And if those derivatives are credit default swaps and there is a default event, the claims of those who purchased the insurance take precedence over all others. Not a good time to have your money in BOA, even if only a small portion of bonds defaulted. And the FDIC is hand to mouth and looks at its available cash to decide who they can "resolve" in any given week. Why do I suspect that voting for a few hundred billion dollars to hold BOA retail depositors harmless might be where Congress finally draws the line?

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Dec 10th, 2011 at 05:37:04 PM EST
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