A lazy (or manipulative) writers signature. They state this like it is some kind of fact or something. Each of us is an individual with their own mind. The only way this statement can be true is if ALL Americans are losing confidence in the economy, which is absurd. It is an attempt to manipulate us with groupthink. Be aware of this and you will notice how frequently it occurs.
CBS MarketWatch.com
By Greg Morcroft
September 6, 2002
Source
NEW YORK (CBS.MW) -- U.S. banks and their customers continued to pour money into derivatives in the second quarter, as the total value of the specialized contracts passed $50 trillion.
Derivative investments generally rise during times of economic uncertainty, and the recent scandals, concerns about a possible war with Iraq and volatile share prices all inspired investors to hedge risk through derivatives.
In a report issued by the U.S. comptroller of the currency, the total amount of derivatives in U.S. insured commercial bank portfolios rose by $3.8 trillion in the second quarter, to $50.1 trillion. See the OCC report(PDF File).
Bank earnings from derivatives rose to $3.4 billion in the second quarter, a 7.1 percent jump from the first quarter, and a highly unusual move according to the OCC's Michael Brosnan.
"This is the first time we've been looking at the data that second-quarter revenues increased from the first quarter," Brosnan said, adding that the large rise in total value of derivative positions caused the jump.
The top seven banks accounted for 85 percent of total trading revenue, compared to 84 percent in the first quarter.
During the second quarter of 2002, banks charged off $25 million from derivatives, or 0.005 percent of the total credit exposure from derivative contracts, the report said. That compares to banks' second-quarter charge-offs totaling 0.82 percent of loans.
Seven commercial banks account for about 96 percent of the total amount of derivatives, with more than 99 percent held by the top 25 banks, the report said.
The banks with the largest derivative positions were J.P. Morgan For all banks, the fair value of contracts past due 30 days or more totaled $31 million, or .006 percent of total credit exposure from derivatives contracts, the report said.
Interest rate contracts increased by $3.4 trillion, to $42.7 trillion during the second quarter. Foreign exchange contracts rose by $183 billion to $5.8 trillion, excluding spot foreign exchange contracts, which increased by $332 billion to $504 billion, the report said.
Equity, commodity and other contracts jumped $85 billion, to $1.1 trillion, and credit derivatives increased by $54 billion, to $492 billion.
Interest rate contracts accounted for 85 percent of the total amount of derivative positions, foreign exchange made up another 12 percent and the balance comprised equity, commodity and credit derivatives.
The number of commercial banks holding derivatives increased by 12, to 391, the OCC said.
Greg Morcroft is New York news editor of CBS.MarketWatch.com.
© 1997-2002 MarketWatch.com, Inc. All rights reserved.
Corporate debt saps nation: Credit stress hits Depression level
Deepening pessimism actually may do the stock market some good
"Analysts say the mood of the market must plummet to truly miserable levels to hit bottom and then head higher again.
''Historically, that has been the turning point. Whenever we have had a really bad run as we have been having this year, you don't have the bottom until everyone throws in the towel,'' said Arthur Hogan, chief market analysts at Jefferies & Co. ''You need to have everyone be bearish.''
Get pessimistic, the analysts need you. Hurry, hurry, hurry, get as miserable as you possibly can in the shortest time possible...