The $700 trillion elephant

MarketWatch est une filiale du Wall Street Journal, qui me sert à suivre avec une jubilation suspecte voire malsaine la chute des cours du Dow Jones, du CAC 40 et de tous leurs amis.
Quand je vois sur MarketWatch un M. Kostigen qui ose intituler sa chronique Ethics monitor, déjà je ricane. Son article est fort intéressant pour tout ce qu'il dit sans le dire tout en le disant.

THOMAS KOSTIGEN'S ETHICS MONITOR
The $700 trillion elephant
By Thomas Kostigen, MarketWatch
Last update: 12:01 a.m. EST March 6, 2009
SANTA MONICA, Calif. (MarketWatch) --

There's a $700 trillion elephant in the room and it's time we found out how much it really weighs on the economy.
Derivative contracts total about three-quarters of a quadrillion dollars in "notional" amounts, according to the Bank for International Settlements.

Woa ! Hold it right there ! Three-quarters of a quadrillon ? What an amusing concept : a quadrillion seems to be 1000 trillions, ce qui fait un million de milliards, si je ne m'abuse. Nous parlons donc de 700.000 milliards.

The Bank for International Settlements, BIS pour les intimes, la voici : son siège est a Bâle, en Suisse, como no. Personne n'en a jamais entendu parler, c'est dommage, elle gagne à être connue, même si ses rapports et communiqués de presse sont un peu arides...

Pour les derivative contracts, produits dérivés en français, se taper la définition de Wikipédia. Quant à la notion (si j'ose dire) de "notional amount", même Wikipédia a un peu de mal avec la définition. Pour faire court, disons le montant théorique.

Bien, une fois tout ceci éclairé, nous pouvons continuer à lire cet article, vous allez voir ça va aller tout seul :

These contracts are tallied in notional values because no one really can say how much they are worth.

Well I for one can say how much they are worth : they ain't worth shit ! Zilch. Peanuts. Pas un clou !

But valuing them correctly is exactly what we should be doing because these comprise the viral disease that has infected the financial markets and the economies of the world.

Oh yes let's be doing it.

Try as we might to salvage the residential real estate market, it's at best worth $23 trillion in the U.S. We're struggling to save the stock market, but that's valued at less than $15 trillion. And we hope to keep the entire U.S. economy from collapsing, yet gross domestic product stands at $14.2 trillion.
Compare any of these to the derivatives market and you can easily see that we are just closing the windows as a tsunami crashes to shore. The total value of all the stock markets in the world amounts to less than $50 trillion, according to the World Federation of Exchanges.

On en déduit aisément qu'il y a quinze fois plus de produits dérivés que d'actions dans le monde. Une autre comparaison amusante : le produit national brut mondial est estimé en 2008 à 70 trillions de dollars.

To be sure, the derivatives market is international. But much of the trouble we're in began with contracts "derived" from the values associated with U.S. residential real estate market. These contracts were engineered based on the various assumptions tied to those values.

Résumons-nous : les produits dérivés sont des produits imaginaires dont la valeur théorique était (mais n'est plus) basée sur certaines hypothèses relatives à des valeurs du marché immobilier américain, lesquelles n'existent plus non plus. Je sens qu'on progresse.

Few know what derivatives are worth.

I simply love the understatement.

I spoke with one derivatives trader who manages billions of dollars and she said she couldn't even value her portfolio because "no one knows anymore who is on the other side of the trade."
Derivatives pricing, simply put, is determined by what someone else is willing to pay for the contract.

In other words, like all worthless shit, its price is the one you can convince a poor sucker to buy it for. You might as well be selling penis enlargement miracle medicine...

The value is based on an artificial scenario that "X" will be worth "Y" if "Z" happens. Strip away the fantasy, however, and the reality of the situation is akin to a game of musical chairs -- without any chairs.
So now the music has finally stopped.

Un jeu de chaises musicales sans chaises et sans musique. L'équivalent financier du couteau sans lame auquel manque le manche. Notre ami Kostigen ne peut pas expliquer plus clairement l'inexistence totale de ces 750 trillions de dollars sans se faire virer de son boulot...

That's why stabilizing the housing market will do little to take the sting out of the snapback we are going through on Wall Street. Once people's mortgages were sold off to secondary buyers, and then all sorts of crazy types of derivative securities were devised based on those, and those securities were in turn traded on down the line, there is now little if any relevance to the real estate values on which they were pegged.

There is no fucking relevance at all, as you already made abundantly clear before, Thomas, old chap !

We need to identify and determine the real value of derivatives before we give banks and institutions a pass-go with more tax dollars. Otherwise, homeowners will suffer as banks patch up the holes left in their balance sheets by the derivatives gone poof; new credit won't be extended until the raff of the old credit is put behind.

Yikes ! On file l'argent du contribuable aux banques et au lieu de le prêter aux gentilles familles de travailleurs méritants menacés d'expulsion de leurs pavillons, elles le versent dans le trou noir des 750 trillions de dollars "gone poof" ? Mais ça va pas du tout ça Madame, parce que pour boucher le trou, comme démontré précédemment, il faut dix ans de produit national brut mondial.
Il y a donc un sérieux bug dans l'affaire.

It isn't the housing market devaluation, or the sub-prime mortgage market defaults that have us in real trouble. Those are nice fakes to sway attention away from the place where greed truly flourished -- trading phony instruments to the tune of $700 trillion.

"phony instruments" : there, you said it ! Don't you feel better Thomas honey ?

Let's figure how to get out from under that. Then maybe the capital will begin to flow again through the markets. Right now, this elephant isn't just in the room, it's sitting on us.

En résumé, pour sortir de la crise, il suffit de gagner un jeu de chaises musicales sans chaises et sans musique, avec un éléphant assis sur le dos. Un prix d'imagination dans la métaphore à notre excellent camarade Thomas Kostigen. D'habitude on dit simplement "when pigs fly", ou "when Hell freezes over"...