From “Outside The Ivory Tower”, by Dr. Susanne Trimbath
Back in March, I wrote a piece for NewGeography.com called Burnin’ Down the House (www.newgrography.com/users/susanne-trimbath) on the financial crisis. I used data on derivatives outstanding made available by the Depository Trust and Clearing Corporation for publicly traded credit default swap contracts and compared that to the market value for public companies based on recent closing stock prices. In case after case, there are more derivatives than there are underlying assets — meaning you could buy all the equity to take control of a company, drive the company into default, and profit from the derivatives payoff. [entire post]