Thursday, February 13, 2014

$500 trillion derivative bomb is looming

Stockman:  “I think the great ticking time bomb is interest rate swaps.  The last time I checked they were in the range of $500 trillion.  Who knows what’s lurking underneath the surface there?....

Continue reading the David Stockman interview below...


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“All those positions have been put on over a period of years, or even decades, in which the price of bonds has been rising steadily for the last 30 years.  But I think we’ve reached the end of that long 32-year interest rate cycle.

We are in the turning zone and rates are going to revert to more normal levels over time, and that’s going to fundamentally change the valuation of all of those massive positions ($500 trillion worth) that have been put on.  I don’t think anyone has any idea how that will unfold, unravel, and dislocate, but I don’t think it’s neutral.”

Eric King:  “What is your greatest fear, David?”

Stockman:  “The single greatest danger is that the game the central banks are playing today will come to an abrupt and destructive end.  That’s the danger because the whole system is now running off the short-run maneuvers, liquidity, and guidance that the central banks are injecting into the market every day.  The danger is that one of these days the whole system will fail because it is unnatural and artificial, and when that happens it’s going to be a pretty difficult (and chaotic) time.”

IMPORTANT - Part II of Stockman’s interview is only a small portion of what had to say in his extraordinary audio interview.  The KWN audio interview with David Stockman discussing financial instability and collapse, gold, the end game and much more is available now and you can listen to it by CLICKING HERE.   

IMPORTANT - KWN will be releasing interviews all day today with David Stockman and others.

David A. Stockman: Former Dir. of the US Office of Management and Budget, Economic Policy Maker, Politician, Financier & Acclaimed Author of New York Times best-seller, “The Great Deformation: The Corruption of Capitalism in America. To order from Amazon CLICK HERE.

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The audio interviews with David Stockman, John Mauldin, Eric Sprott, Bill Fleckenstein, Egon von Greyerz, Dr. Paul Craig Roberts, MEP Nigel Farage, James Dines, Gerald Celente, Andrew Maguire, Art Cashin and Dr. Marc Faber are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf -- to listen CLICK HERE.

Eric King

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