New Law Would Make Taxpayers Potentially Liable For TRILLIONS In Derivatives Losses

Activist Post: New Law Would Make Taxpayers Potentially Liable For TRILLIONS In Derivatives Losses



Derivatives work like this...........imagine a normal wave on an osiloscope. It goes way up, above the line and then way down below the line. So shares are bought in companies going up to make profits and 'put' options are taken out against companies going down.

So if a science company finds something new,their shares go up. BUT the competitors shares go down. People bet both ways.  That is a simple one. But the longer the chain of ups and downs gets, the more money that can be made. If they all go up and down, in the proper sequence, gazzillions can be made. The opposite leads to mega losses. It only needs a couple of links to fail and the whole chain is rubbish.

The banks noted in this article own more derivatives than they have assets. So if they are winning,that's fine. If not then they must continue to tack on more daisies to the chain just to pay their debts