Ever imagine getting your tie caught in a mechanical set of gears (sorry ladies – but I will spare you). The results are nasty! Now you know what the Sultans of Swap in the $695 Trillion global OTC derivatives market feel like. Every day the slow moving gears of the world economies relentlessly grind, making it harder and harder for the Sultans to wiggle loose or breath.
Financial Gearing is what we non-accountants often refer to as simply ‘Leverage’. Whichever your preference, it has the Sultans of Swap tightly caught in a manner that has greatly restricted their options and is now slowly squeezing the liquidity life out of them.
As the economies of the world adjust to the comatose shock of the Financial Crisis, the general public is only now awakening to the fall-out and structural changes resulting from this historic tremor. Some impacts are obvious; the most important are not – yet!
Continue reading Sultans of Swap: Fearing The Gearing!
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