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OMG

From: The Mogambo Guru, 20 SEPT 2006

-- If you like theater of the absurd, then you will love "Everyone Loves A Parade!" by Rob Kirby of Kirby Analytics. He writes "J.P. Morgan Chase's derivatives book grew from 48.26 Trillion notional at Q4/05 to 53.76 Trillion at Q1/06. That's RECORD new growth of 5.5 TRILLION notional, folks!"

Note the clever use of capitalization to indicate emphasis, which makes the ending exclamation point seem almost, umm, understated. Seizing my red "Editor's pencil", I change it to read... "$5.5 TRILLION notional, folks!!" with the more powerful double exclamation point, which seems better suited to convey the significance of it all.

But, if you are like me, then your eyes immediately glazed over at the shock of learning that this is somehow vitally important but we have no idea what or why, made more mysterious and scary by the sheer incomprehensibility of the creation of $5.5 trillion in new derivatives in one quarter.

Mr. Kirby, wise to the ways of The Mogambo, sees that first little bit of Stunned-Mogambo Drool (SMD) coming out of the corner of my mouth, and instantly realizing his mistake, quickly backtracks by saying "Let's first try to quantify just how much a $5.5 trillion build in a derivatives trading book over a three month period really is, shall we?"

My mind is charmed by his use of the word "we", as we both know he means "him", as I am far, far, far too stupid to participate in building anything (unless you define "making of mess of everything I touch" as "building", except maybe in a Schumpeterian "creative destruction" kind of way), and sure enough he goes on without me, saying "The first quarter of 2006 contained 65 business days [64 excluding Presidents Day]. $5.5 Trillion divided by 65 equals $84.6 Billion per day in NEW BUSINESS - forgetting rollover of existing business which, in itself, must be massive."

Someone is creating $84 billion, per day, in new derivatives contracts? I leap to my feet and shout "One day? In one day? In one freaking day?" I am stunned. I am scared.

posted by G @ 10:05 AM