The Financial Services Authority (BBC Radio 4, Today Programme, 31 Jan.) know what exactly is going on but they are too busy covering up for the banks.
Known by the US Congress as ‘complex financial products’, or ‘exotic financial products’, derivatives are bets. Bets that a share you don’t want to own will go up or down.
According to the Bank of International Settlements, there is around $648 trillion outstanding (only Over The Counter because there’s more) – the global economy is around $70 trillion.
Derivatives did for Dexia Bank in Belgium in 2011 (they told you it was something or other to do with Greece and the Euro not that it’s Europe’s top derivatives bank) and the people are now suffering (PM Programme, 30 Jan.) because the government decided to take 15% of the economy to pay off Dexia’s debts.
If the politicians allow it, derivatives will sink the global economy (global GDP went from $65 trillion, 2010-11 to $70 trillion, 2011-12. It’s not in recession, yet.)
You are not allowed to use the term ‘insurance’ when you flog these things to the financial sector. Because, it’s not insurance, it’s betting. Yet, this is what banks told SMEs, that is, they lied.
Because banks are losing billions on the derivative debt, they thought it would be a good idea to con business people and get their money to pay for their stupid, fraudulent deals.
They knew what they were doing.
In terms of Dexia, not only were they not particularly exposed to Greek debt but Greece at the time had not defaulted. They blatantly lied to us.