US in worse position than Russia or Brazil in the '90s

The U.S. is now in WORSE shape
than Brazil, Russia, Greece or Spain have ever been

Consider the high-risk gambles that super-investor Warren Buffett calls “financial weapons of mass destruction.”

I’m talking about special kinds of investments called “derivatives.” They were a major cause of the real estate and debt crisis that nearly wiped out all of our largest banks in 2008 — along with the entire U.S. economy.
Russia’s banks never exposed themselves to large amounts of these financial time bombs.
Neither did Brazil’s banks.
And you’d think that, after the 2008 meltdown, U.S. banks would have learned their lesson. But you’d be wrong.
According to the Comptroller of the Currency, a division of the U.S. Treasury Department — U.S. banks held $176 trillion in derivatives at the height of the debt crisis in 2008. Today, U.S. banks hold $244 trillion in derivatives — nearly 40% more.
That fact alone places the U.S. in greater danger than many other countries, past or present.

America is also in great danger for another big reason. Washington is now sitting on the largest pile of debt in the history of civilization: About $14.5 trillion and counting.
And it doesn’t even begin to include the debts Washington inherited from Freddie Mac and Fannie Mae or all the money Washington owes to seniors for Social security and Medicare, or to veterans and government pensioners.
Add that in, and Washington’s total obligations are over $120 trillion.

Attribution to Weiss Research Institute

 

what alot of brain dead americans fail to realize is that america is very much dependant on central banks running to the dollar's rescue everytime it falls below a certain point. Otherwise by now the dollar would be about 80% lower than it is right now!

 

To put things in perspective the entire US GDP is about $16Trillion and the world GDP is about $60trillion. The worldwide dervatives exposure is about $600trillion.

When the derivatives market has a hiccup it can collapse the entire world economy. In 2008 a small mortgage derivative failure triggered a cascade that almost brought down the entire world financial system as firms scrambled for cash to cover derivative positions.

To make up for their losses the big banks have doubled down, this time on EU debt. The fact that there is not nearly enough money on the planet to pay off all the derivatives if the Euro goes belly up has not crossed their minds.

 

I am sure it has . We have both been aware of it and in my case for a long time .It is inconceivable that these simple facts are not widely know among the financial community .
What is amazing is that nobody of any significance has yet broken ranks and said what I have been saying for at least two years :- namely ,
There is absolutely no real way out of the world debt crisis .The key word there is , "real"
Unless the world writes off a proportion of all Sovereign debt -- say at least 33% , and lowers Sovereign Bond interest rates to a flat 2% across the world , with Sovereign State borrowing only allowed with World Bank approval .Or an independent World Economic Think Tank .
I personally would want a global law banning any politician from being involved in any part of it --why employ caretakers to rewire the total office block?

 

Everyone is in a bad state. Higher borrowing costs in France due to threat of downgrade, low growth expected for Germany, higher deficit than predicted in Spain, Italian bonds at 7% again (and it has to find 100 Billion EU in the first few months of the year alone), Greece months away from default. Etc etc. It’s only the fact that things are so bad here that keeps attention away from the US.

 

See it this way , TC , and the picture is accurate .
At the front of the ship sits the US and thereafter the running order is something like Germany , UK , France , Italy , Spain . And then the others with Greece sitting in the stern .
The ship has been holed in the stern and the front rises into the air , ready to plunge .
They all go under , in order , and in consequence of their seating position .
The only reason the US goes last is because it is the lender of last resort --- $ is the world reserve currency --- and with the Federal Reserve they can print more imaginary money than anybody else .
Because of the total money involved ( US owes more than $100 trillion now) , no rescue is possible .
And because the hole in the stern is so large , there can be no survivors .

 

Yeah, but as long and investors and brokers can make money on derivatives, who really cares, eh?

 

All people are investors or brokers .
So what is your point?
Anybody not playing the game just sweeps homes and streets -- metaphorically speaking .

 

I guess we need 8 years of a Socialist President and we'll be doing well. Obama's enemies call him a socialist but he isn't really one. Lula was much more a socialist than Obama and Brazil is doing very well.