Thursday, February 18, 2016

Confidence building................

According to the latest data from the Bank for International Settlements, the central bankers’ central bank, the total amount of outstanding derivative contracts has declined from a 2012 peak of $700tn to about $550tn. To put this into perspective, the figure has fallen from just under three times the value of all the assets in the world to a little over twice the value.

We are reliant on their risk modelling but these models break down in precisely the extreme situations they are designed to protect us against.

Accounting practices provide an appearance of precision that may be a poor guide to a world characterised by multiple risks and radical uncertainty.

-John Kay, as culled from here

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