By Mike Whitney
Knowing the known unknowns of a possible market disaster
Satyajit Das is not the sort of person you want to meet after a really bad day in the markets. The renowned derivatives expert has such a gloomy outlook on the state of the world's financial system that you might have to be kept away from sharp objects after he leaves the room.
"I think this crisis has a long way to run," the globetrotting Mr. Das said yesterday from London. "It is an extra-innings baseball game and the national anthem still hasn't finished playing. So we really don't know what the worst is."
Unlike some permabears who see a dark lining to every silver cloud and who have waited vainly for years for what they are convinced will be the mother of all market crashes, Mr. Das backs up his concerns with an impressive track record as a banker, trader, corporate treasurer and risk consultant.
No one is better at explaining the opaque world of what he calls "supersized" leverage stemming from the slicing and dicing of risk and the vast expansion of credit derivatives, which now total $516-trillion (U.S.), accounting for an amazing 75 per cent of the world's liquidity.