October 10, 2008

financial weapons of mass destruction

Felix G. Rohatyn, the investment banker who saved New York from financial catastrophe in the 1970s, described them as potential “hydrogen bombs.

Warren E. Buffett described them as “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”

The total market size of these instruments are $516 trillion, i.e 10 times the value of the entire world's output: it's been called the "ticking time-bomb".

Answer in comments

3 comments:

praneeth said...

Derivatives

Desh said...

Naah - you have got it wrong by 50%!!

http://www.drishtikone.com/?q=blog/one-quadrillion-equation

its $1144 Trillion! CDS = 548 + OTC Derivatives = 596.

iRat said...

@Desh

If you really ponder over it, CDS is also a form of derivative instrument. Wherein you buy a debt instrument based on its projected value after a period of time.

Correct me if am wrong.