The Derivatives Market Panic Will Cause Many to File Bankruptcy

The Derivatives Market Panic Will Cause Many to File Bankruptcy "When it comes to financial matters, the majority of Americans have limited knowledge of how financial markets function, let alone their own checking account. If you attempt to explain the derivatives market to the average person, they will look like a deer in headlights. Due to the complexity of the derivatives market, this is not particularly surprising. People should not feel foolish because this was designed to be incomprehensible to everyone except its creators. In 1999, the Glass-Steagall Act was repealed so that megabanks could engage in unregulated trading. The unfortunate aspect of this is that these individuals are toying with our money. When they lose money, insolvency is not in their future because the government bails them out. People do not realize that when the US financial markets collapse, the economy follows suit. In 2008, consumers and businesses were unable to obtain credit, causing the economy to suffer a complete cardiac arrest. This financial catastrophe was caused by the same institutions that we bailed out, which created a real estate bubble. As numerous Americans declared bankruptcy and lost their homes to foreclosure, banks were bailed out with trillions of dollars from taxpayers.The derivatives market is essentially a Wall Street casino that enables banks to wager on the future value or performance of currencies, commodities, equities, and even interest rates. Some of these wagers are controlled by the same individuals who wager on it. They believe there is nothing wrong with what they are doing and that it is effective so long as there are no significant economic fluctuations. Recently, MF global was forced to declare insolvency due to poor derivatives trades against European currencies. As a result of MF global's admission that it diverted money from customer accounts that were supposed to be kept separate, the banking world has become the Wild West. These men are currently gambling like drunken mariners while the central banks bail them out. The Fed prints $85 billion per month to distribute to banks in order for them to repurchase US mortgage-backed securities. The media continue to assert that the foreclosure crisis is over and that now is the time to purchase real estate. At the end of 2012, there were over 5 million distressed and foreclosed properties in the United States. Many experts estimate the global derivatives market's exposure to be anywhere between $600 trillion and $1.5 quadrillion dollars. This does not sound like recovery, but rather a category five cyclone on the horizon.After the 2007 financial crisis, when banks should have filed for bankruptcy due to poor management, they were rewarded with massive subsidies. These institutions have grown to enormous proportions compared to their former size and now control the entire economy. The government recently reported that the four largest banks in the United States account for 93% of the entire banking industry and 81% of the industry's net current credit exposure. I believed that our government was tasked with safeguarding us from this type of consolidation of power. They have become so potent that allowing them to fail would cause the United States economy to collapse. Bringing back the Glass-Steagall Act is one measure that would promptly stop the insanity. This would restore banking industry credibility and accountability.Americans must be cognizant of their individual circumstances and find a way to become debt-free, even if it means registering for bankruptcy. The average American's credit card debt has now surpassed $16,000 and is increasing. As the income of the middle class continues to decline and debt levels rise, individuals must devise strategies to eliminate their debt. Now is not the time to await the return of the economy. It is better to live in the present and focus on what is certain. According to a recent study, the average American is three paychecks away from declaring bankruptcy. This is alarming because it demonstrates how much the average consumer relies on credit cards for security. We must rouse up, set aside our pride, and, if necessary, consult a bankruptcy attorney. It is time for Americans to return to a debt-free way of life and stop being slaves to these megabanks.
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