This is dated 2001.
As we plunge through the early years of our new millennium, any study of derivatives in the US among leading blue-chip financial institutions inevitably leads to one conclusion. Virtually all paths of derivatives inquiry lead to the same destination. Today, more than ever before in the short history of derivatives, one leading United States institution effectively IS the derivatives market. This company, as we will explore in this essay, is the American giant superbank JPMorganChase.
It is very hard to believe that the total US notional derivatives positions of US commercial banks and trusts is $43.9 TRILLION. By comparison, the US GDP, all the goods and services produced and consumed in our entire great nation by every single American each year, was only running $10.1t in the first quarter. The US M3 money supply, the broadest measure of money, was only $7.4t at the time. iIt far exceeds the entire US GDP, the entire broad US money supply, and the entire value of all the stocks traded in the US!
Of that $43.9t, JPMorganChase, a single holding company, controls a breathtaking $26.3t worth of derivatives in notional terms! JPM represents 59.8% of the total derivatives market controlled by US commercial banks and trusts per the OCC. Why on earth would one entity run up such gargantuan exposure to derivatives?
http://www.zealllc.com/2001/monster.htm
- Carolab
