Oil Derivatives Explosion Double 2008 Sub-Prime Crisis-David Morgan

by Greg Hunter, USA Watchdog Precious metals expert David Morgan says the plunge in oil prices is not good news for big Wall Street banks. Morgan explains, “The amount of debt that is carried by the fracking industry at large is about double what the sub-prime was in the real estate fiasco in 2008. In summary, we’re looking at an explosion in potential that is greater than the sub-prime market of 2008 because, number one, oil and energy are the most important sectors out there. Number two, the derivative exposure is at least double what it was in 2008. Number three, the banking sector is really more fragile . . . and we have less ability to weather the storm.” Morgan, who is also “a big-picture macroeconomist,” says oil derivatives could take down the system just like mortgage-backed securities back in the last financial meltdown. The Fed said the sub-prime crisis would be “contained.” It was not. So, could oil derivatives take down other derivatives in a daisy chain type of collapse? Morgan says, “Absolutely, there is no question about it. The main problem is the overleverage of the system as a whole. Warren Buffett calls derivatives weapons of financial mass destruction, which is a true statement. Secondly, look at how derivatives are interconnected. Derivatives can tie a financial instrument to another financial instrument or a financial derivative can be tied to an oil derivative. This is just a flavor of how complicated these mathematical equations really are, and no one really knows the risk in them.” So, underwater oil derivatives in one bank could bring down the financial system? Morgan says, “Absolutely, because it is all tied together, all the banks are interconnected.” Continue Reading>>> Unbelievable Lack of Trust in the System

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