Derivatives–The Mystery Man Who’ll Break the Global Bank at Monte Carlo

When I do radio interviews or lecture presentations, I’m often asked: “Mister Rawles, what do you see as a likely ‘worst case scenario’?” People expect me to say “a full scale nuclear exchange in World War III” or, “a stock market crash”, or “a flu pandemic”, or “a sudden end to the current real estate bubble.” But most of them are surprised when I respond: Economic collapse triggered by the popping of the derivatives bubble. Many people that are involved in the periphery of the investing–including most small investors–have never even heard of derivatives. They may have heard of ‘hedge funds”, but they don’t understand what they are. Yet in terms of the sheer number of Dollars, Yen, and Euros traded, these investments represent the biggest financial market of all