Debt derivatives Vs Health Care

There are an estimated $ 10 trillion of loans priced off LIBOR. 

However, this is dwarfed by the value of interest rate swaps priced off LIBOR, which amount to  

$402 trillion (OTC notionals as at end 2011 according to the BIS). 

Then there are OTC forward rate agreements at about $50 trillion notional and and then there's the euro-dollar futures market  (A single Eurodollar future is similar to a forward rate agreement to borrow or lend US$1,000,000 for three months) , clocking in at about $560 trillion notional.

 

It follows that a single basis point up or down in LIBOR has enormous effects on all these markets in toto.  

All of these THOUSAND TRILLION (Quadrillion) Dollars worth of Debt Derivatives are completely unregulated, opaque, over the counter deals. 

And it is safe to say that nobody on earth has any real idea of what the counterparty risk of any individual participating bank might be at any given time.

It is also safe to say that none of these Quadrillion dollars of sheer high risk gambles can be considered "A Hedge."

Now you know why the global banking system is truly Too Big To Fail, and why all the world's productive capital is now being sucked into this insatiable vortex of Capital Destruction.

Good thing we spend all our time arguing over whether 1/2 a trillion dollars of health care fees should be considered a penalty or a tax. 

Maybe when we solve the pressing issue of those 1/2 trillion dollars we can turn our attention to the 1000 Trillion Dollars of Debt Derivatives that are about to destroy the Global Economy.