Tuesday, December 23, 2014

Derivatives on earth: The world's (sef)destruction button, nuclear option, and the greatest bubble the Empire has ever created

First I wanted to highlight Venezuela's vulnerability in the current round for global supremacy played out in the risky attempt at rebooting the Empire, as shown by Federico Pier in his article on the ruble, oil, derivatives, and the US hegemony.

If this monopoly game is a bit like chess, it is played at several chess boards at the same time (with new moves just made at the game involving Cuba).

But then I decided to go for the real elephant or perhaps Mega Bot in the room--the derivatives. In terms of their size, there is nothing like it on earth (a phrase that used to define Leviathan). They dwarf not only actual assets of the largest banks on earth, but also the GDP of the world or any country many times over.

In the end what is backing up these derivatives is not simply nothing, but the military might of the US, NATO, their allies, and the control over the elites, money, the economy, institutions, and the minds. But, in everyday practice, all the gigantic size and "wealth" represented by the derivatives is a mental construct that depends on agreements and suspension of reality.

Thus the problem is both simple and gigantic: the Empire overextend itself by hugely overextending the derivatives by means the fictional and nominal needs to be converted into the real. In this, the derivatives not only created unprecedented (apparent) power and wealth, but also an obvious built-in destruction/self-destruction button. Whoever figures out how to expose and checkmate the insolvent scheme of the derivatives or, conversely, how to convert all these absurdly inflated property claims into seemingly valid rights on earth and mankind (thus buying much of it as one's property), would not only deserve a Noble Prize (whether for economics, war or peace), but would also likely rule the world ... with a high risk of a crisis and destruction the like of which we have never seen before.

The derivatives are property claims on everything which the world produced many times surpassing anything which mankind has ever produced. Destroying or unleashing this potential power of the derivatives is a new kind of nuclear option for this world. That's also why the New World Order demands "globalization"--making any sovereignty, that is, any self-defensive measures, impossible.

From the position of this late capitalist system, the idea ("final solution") and the possible goal would be to convert the nominal value of the derivatives into thousand-year long public debt as well as equally long private, personal debt of everyone (except the elite) on the planet. The financial elite made up these values, they also like to see that it is also more or less what we all should owe to them. Under this gradually unfolding scheme (for it is already unfolding), salaries and wages as we used to know them would no longer exist. We would work only to pay a portion of the interest on the eternal debts which the derivatives or the global elite hiding behind the derives have made for us and for many generations to come.

Pier wrote:

"Let’s give some the numbers to these words and see how many of these crazy financial instruments, the US banks have:

JPMorgan Chase
Total Assets: $ 2,520,336,000,000 (about 2.5 trillion dollars)
The total exposure to derivatives: $ 68,326,075,000,000 (more than 68 trillion dollars)
Total Assets: $ 1,909,715,000,000 (just over 1.9 trillion dollars)
The total exposure to derivatives: $ 61,753,462,000,000 (more than 61 trillion dollars)
Goldman Sachs
Total Assets: $ 860,008,000 (less than a trillion dollars)
The total exposure to derivatives: $ 57,695,156,000,000 (more than 57 trillion dollars)
Bank Of America
Total Assets: $ 2,172,001,000,000 (a little 'more than 2.1 trillion dollars)
The total exposure to derivatives: $ 55,472,434,000,000 (more than 55 trillion dollars)
Morgan Stanley
Total Assets: $ 826.568 billion (less than a trillion dollars)
The total exposure to derivatives: $ 44,134,518,000,000 (more than 44 trillion dollars)
A useful comparison to fully realize what numbers we're talking about: the US public debt amounts to 18 trillion dollars. The derivatives markets, only of the six largest banks in America, amounts to almost 16 times the US debt!"

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