I’ve been following The Ticker Forum Message Board and some of the posts there, many of which are in Finance.
They claim that we may have a financial nuke coming in the area of 687.3 Trillion Dollars, if :
Go read the latest AIG Ticker again. Specifically, this paragraph:
As with the phony reinsurance contracts that AIG and other insurers wrote for decades, when AIG wrote hundreds of billions of dollars in CDS contracts, neither AIG nor the counterparties believed that the CDS would ever be paid. Indeed, one source with personal knowledge of the matter suggests that there may be emails and actual side letters between AIG and its counterparties that could prove conclusively that AIG never intended to pay out on any of its CDS contracts.
Now consider this.
There is some gross “notional” (or face) value of $683.7 trillion dollars outstanding as of the end of June 08 (last data available.)
The lions share of those are not “CDS” on individual names or CDOs like what is going on here with AIG. They are instead interest-rate and/or FX products of one sort or another; $458 trillion worth.
If even a couple of percent of those swaps are in fact “private lettered” out in the fashion that AIG is alleged to have done with their CDS…
http://market-ticker.org/archives/925-Ticking-Financial-Nukes-OTC-Derivatives.html
(Hint: This is how “notional” amounts end up becoming realized losses!)
Our Congress had better dig into this hornets nest right damn now because if in fact there is any material amount of this crap going on in the OTC derivative market the $170+ billion blown on AIG trying to cover it up will be a mosquito on an elephant’s ass in comparison to what’s about to happen to the world’s economy and banking system.
If, in fact, it cannot be proved that this is not the case, given the extraordinary lengths that both government and private parties have gone to in order to cover up what IRA alleges AIG was actually up to, we must ring-fence and cut off any part of the financial system impacted by a potential detonation of that market right now, including the US Federal Government, as such a detonation will, if it occurs, destroy any part of the financial system it infests at the time the unwind occurs.
What do some of you fanancially savy people make of this and what are the real repercussions should it come to fruition?
http://www.tickerforum.org/cgi-ticker/akcs-www?post=89778