Warren Buffett has called them weapons of mass financial destruction, derivatives are the financial products created to package the toxic and loser assets in mostly non transparent assemblages for resale.
After the 2008 crash, the big money was looking to offload these toxic assets to clean up balance sheets and by creating these asset classes they needed a long term buyer to hold until things came back. Enter the go to buyer globally to the big money institutions offloading them…BANK OF JAPAN.
By 2011 BOJ held a majority of the world’s derivatives, trillions worth. But what was in these “packages” ? NO ONE REALLY KNEW until someone bought them. So when BOJ cries poor here , remember the money tide is going out and the naked will soon be exposed.
In theory, if only 15 to 20% of these toxic derivatives are backed with REAL ASSETS with discernible value, then global debt exacerbated by pandemic economic impacts has decimated value in many of these arrangements creating a gambling foundation for the world’s wealth when finally manifested and realized in cash out final values
The cash out value minus the big boy cut in mandated fees means world operating on smoke and mirrors compared to losses realized when all is finally said and done, a major reason we will never INVEST IN US STOCK MARKET, that correction will be brutal if it ever comes to pass. Food for thought..
Another American ally just issued an economic warning because of the trade war