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09-15-2009, 03:48 PM #1
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How to Prepare For China's Coming Derivative Default
How to Prepare For China's Coming Derivative Default
By Graham Summers
Sep 14 2009 11:40AM
www.gainspainscapital.com
In case you have not heard the news, China has announced that it will be instructing its state-owned enterprises to potentially default on their derivatives contracts. As I have written extensively in the past, the derivatives market is a massive time bomb just waiting to go off. China’s latest move may be the match that lights the fuse.
All told, US Commercial banks own $202 trillion in derivatives in notional value. To put that number into perspective, it’s roughly four times the global GDP. And 96% of this exposure sits on five banks’ balance sheets. I’ve shown the below chart before, but it’s worth re-visiting (chart is denominated in TRILLIONS).
Of course, not ALL of the $202 trillion these guys own is “at risk.â€Join our efforts to Secure America's Borders and End Illegal Immigration by Joining ALIPAC's E-Mail Alerts network (CLICK HERE)
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