Warren Buffet once famously called Derivatives a financial weapon of mass destruction but that hasn’t stopped the out of control banking sector to build a bubble worth $500 trillion to 1.5 Quadrillion and since the profits were privatised while the losses were socialised there has been no risk for the banksters.
So if you have a Derivatives trader/City of London/Wall street banker turned Prime minister and his Minister of finances has unlimited Authority to borrow and invest you can bet your bottom dollar that borrowing and
betting investing is what they will do. Especially when they can do so without governmental oversight.
With NZ in hock for $ 112 billion dollar which is about 1 years worth of GDP (correct me if I’m wrong) here are some pointers to what might will inevitably happen when the derivatives bubble will start to unwind.
Let’s begin with Greece. Greece’s government allowed another group of bankers to advise them on their finances and then the bankers started to bet against the country to bankrupt it and now the population is losing everything they had and they will soon literally be starving.
Not only that; those who bought their bonds in the hopes of earning tons of interest to be paid by the starving population will find that when the Greek leave the system (as there is no other way) those bonds will be worth ziltch.
One such trader is JP Morgan (Chase) (which opened an investment bank for rich customers here in NZ in October 2007 and seems to b) and to date they may have lost $ 4oo BILLION on their Greek investment alone and that is just the beginning.
When these traders who have all hedged their bets with the too big to fail banks such as BofA which itself is exposed to $ 77 trillion in unsound derivatives want to cash in on their CDO’s (Collateral debt obligations) the banks who sold them those will collapse because there is no way any bank can even begin to pay on the trillions they owe and if that happens NZ will find overnight that “movement in the derivatives market” (Also known as losing at the pokies) will have wiped of most of the value of the derivatives John Key and Bill English invested in while we the population will still be obliged to pay the money John Key and Bill English borrowed without oversight of our elected representatives.
And unless we arrest these two for fraud, malfeasance, treason and criminal recklessness like they did in Iceland we are in for a whole lot of pain because John Key has just enslaved this country forever to the 1% unless we get rid of the the reserve bank system and go back to government issued public credit and kick the privately owned banks out. It really is that simple.