Financial Armageddon

@sigma77 (5383)
United States
November 28, 2007 2:13pm CST
There is now some 440 trillion dollars leveraged in the world's financial markets. This money does not exist as 440 trillion actual dollars. With leverage, a dollar can be invested as if it was worth 10, 20, 50 or more dollars. If you started counting from one to 440 trillion, counting one number per second, it would take you nearly 14 million years to finish your count. If the financial markets implode from the use of this leverage, we will see the mother of all economic disasters. The world would be bankrupt and revert back to the stone age. If you know anything about financial markets, this is a scary situation to say the least. Any comments are welcome.
1 person likes this
2 responses
@erikssion (109)
• Philippines
29 Nov 07
I am really not that well versed in financial subjects but what really struck me was the figure -- 440,000,000,000,000. I only imagined this figure as bits maybe, but dollars, or any currency for that matter is amazing! I'm really interested in this -- what do you mean exactly by -- the world would be bankrupt and revert back to the stone age? How will that happen?
2 people like this
@ladyluna (7004)
• United States
29 Nov 07
Hey Sigma, I thought the S.E.C. capped leveraging percentages a few years back. Not that one nation's actions could avert a collapse begun elsewhere. With a global economy, we would all feel a domino effect. I hate to say it, but as helpful as the stock market is, it really equates to one big casino. And, the more idiots who get into the market, thinking that they're gut knows best, the greater the risk to us all is. As an aside, I'm actually beginning to question the sanity of allowing crude oil to be traded on the commodity markets. Crude represents a substance directly related to national security. Yet, we have idiots betting that crude will jump to $300 per barrel. And, their 'bets' are largely responsible for our nearly $100 per barrel charges now. A bookie wouldn't take the bets that are placed in commodities trading, so why the heck do other traders? Our whole interational fiat paper money system is a very, very dangersous sham. And yes, it will eventually crumble.
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@sigma77 (5383)
• United States
29 Nov 07
Thanks Luna for your comments. I don't know that there is a cap on leveraging percentages. Most hedge funds can get up to 50 times their investment in leverage. Commodities are highly leveraged as one can control hundreds of thousands or even millions of dollars of products with a small amount of money. But, it is all about money and it is true that the markets tend to create greedy investors and traders. Greed drives up the price of anything and fear also can do the same. The markets are an integral part of our financial systems. The problem is that they are run by humans. Leverage is fine when things are going in your favor, but not so good if they don't. When there are not enough real assets to back up the many leveraged bets, this becomes the basis for mega-crashes. It is just that in this point in time, leverage is in a parabolic state. Meaning that it is extremely greater than at any time previous.
1 person likes this