transsybir
17.03.08, 21:17
With a tip of the hat to Prudent Bear let's take a look at the Bear Stearns'
2007 SEC 10k filing page 80.
As of November 30, 2007 and 2006, the Company had notional/contract amounts of
approximately $13.40 trillion and $8.74 trillion, respectively, of derivative
financial instruments, of which $1.85 trillion and $1.25 trillion,
respectively, were listed futures and option contracts.
The aggregate notional/contract value of derivative contracts is a reflection
of the level of activity and does not represent the amounts that are recorded
in the Consolidated Statements of Financial Condition. The Company's
derivative financial instruments outstanding, which either are used to offset
trading positions, modify the interest rate characteristics of its long- and
short-term debt, or are part of its derivative dealer activities, are marked
to fair value.
The Company's derivatives had a notional weighted average maturity of
approximately 4.2 years at November 30, 2007 and 4.1 years at November 30,
2006. The maturities of notional/contract amounts outstanding for derivative
financial instruments as of November 30, 2007 were as follows:
bp1.blogger.com/_nSTO-vZpSgc/R9yQ0G1_VLI/AAAAAAAACT0/Hw5RblSORRs/s1600-h/Bear-derivatives.png
I followed leads on the above to Bear Stearns: The Smoking Gun(s) and from the
same blog 2007-2009 Bear Market Update A snip from the former also made
reference to the above chart with the following additional commentary.
"This market has become a leveraged nightmare, being so large that the failure
of any single significant company such as Bear Stearns could precipitate a
chain reaction of defaults. As you may recall we pointed out some time ago
that after subprime the next area to watch closely as a potential tipping
point would be the CDS market.
bp2.blogger.com/_H2DePAZe2gA/R9sT8yG-HKI/AAAAAAAAA7k/A-SlM2Kotng/s1600-h/OCCpg1.png
Notice that Bear Stearns is not EVEN LISTED as holding derivatives in any of
the tables we looked at in the OCC Report. Is this because of their 'non-bank'
status? We wonder how many other US corporations are quietly loaded up with
derivatives risks as well, either as a large counterparty, or the target of a
pyramid of wagers on failure risk many hundreds of times their actual net
worth. What a monster Wall Street has created for the world.
globaleconomicanalysis.blogspot.com/2008/03/bear-stearns-bankruptcy-looms.html
