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With all the focus on Greece and the European Union debt crisis, little attention has been given to what is most likely an even bigger time bomb – the emerging $600 trillion bubble in derivatives that will mostly likely burst as the debt crisis deepens, Jerome Corsi's Red Alert reports.
"Nor is it clear that President Obama, who took huge campaign contributions in 2008 from Wall Street, will be able to bring derivatives under federal regulations this year, even if the White House manages to get financial industry reform measures through Congress," Corsi wrote.
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As interest rates begin to rise worldwide, Red Alert predicts losses in derivatives may end up bankrupting a wide range of institutions, including but not limited to municipalities and state governments around the globe, major insurance companies, top investment houses and commercial banks, as well as universities of all types, even those with the largest endowments.
"Defaults now beginning to occur in a number of European cities prefigure what may end up being the largest financial bubble in history ever to burst – a bubble that today amounts to more than $600 trillion," Corsi wrote.
The Bank of International Settlements in Basel, Switzerland, now estimates that derivatives, the complex bets financial institutions and sophisticated institutional investors make with one another on everything from commodities options to credit swaps, topped $604 trillion worldwide – or $0.68 quadrillion – at the end of June 2009.
- A quadrillion is the number 1 followed by 15 zeroes, as in: 1,000,000,000,000,000.
- To visualize a quadrillion, multiply 1 trillion by 1,000.
To illustrate the relative magnitude of derivative contracts globally, the CIA Factbook estimates the 2009 Gross Domestic Product, or GDP, of the world was just under $60 trillion.
Corsi explained, "In other words, derivative contracts have now reach a level 10 times world GDP, an amount so incomprehensibly great that even a 10 percent default in derivatives would equal world GDP."
To learn more about derivatives and how the $600 trillion bubble may bust as the debt crisis deepens, read Jerome Corsi's Red Alert, the premium, online intelligence news source by the WND staff writer, columnist and author of the New York Times No. 1 best-seller, "The Obama Nation."
Red Alert's author, whose books "The Obama Nation" and "Unfit for Command" have topped the New York Times best-sellers list, received his Ph.D. from Harvard University in political science in 1972. For nearly 25 years, beginning in 1981, he worked with banks throughout the U.S. and around the world to develop financial services marketing companies to assist banks in establishing broker/dealers and insurance subsidiaries to provide financial planning products and services to their retail customers. In this career, Corsi developed three different third-party financial services marketing firms that reached gross sales levels of $1 billion in annuities and equal volume in mutual funds. In 1999, he began developing Internet-based financial marketing firms, also adapted to work in conjunction with banks.
In his 25-year financial services career, Corsi has been a noted financial services speaker and writer, publishing three books and numerous articles in professional financial services journals and magazines.
For full immediate access to Jerome Corsi's Red Alert, subscribe now.
