IT COULD HAPPEN AGAIN PART 1

Derivatives are debts and bets of all shapes and sizes, esp. on interest rates, bonds, mortgage-backed securities, and other fixed instruments. They were the epicenter of the financial earthquake that shook the world last year. They triggered the demise of Bear Stearns, Lehman Brothers, AIG and others. And they're still causing aftershocks as evidenced by Dubai last week.

So you would think that steps would have been taken to reduce their threat to the US banking system. No way....Despite a brief reduction in derivatives outstanding in last year's 3rd quarter, US commercial banks now hold an eye popping 203.5 TRILLION in derivatives, a new all time high.

A whopping 97% of all US bank held derivatives are concentrated in the hands of just FIVE institutions: JPMorgan Chase, Goldman Sachs, Bank of America, Citibank and Wells Fargo.

Globally, the monster is 3 times larger than the 203.5 TRILLION held by US banks.