that bad. Let's assume 20% defaults. They said, they did the math, they said, okay, you got a trillion of mortgages. Let's assume 20% defaults, which was crazy. That's $200 billion of losses, which in real terms was not larger than the losses of the SNL crisis in the 1980s. They didn't take into account the derivatives market. That's exactly right. In the 80s, we survived that. They said, 200 billion is a lot of money, but we'll survive. What they didn't know is that there were $6 trillion in derivatives. And you take a 20% hickey on $6 trillion. Now you're talking $1.2 trillion of losses. That's enough to wipe out a lot of banks, which is exactly what happened. So it was the non-transparency, the opaqueness, the blindness of what could happen in derivatives market that caused people to be too confident about what was going on in mortgages. And the over-the-counter derivatives market was estimated at roughly $700 trillion at that time. That's about right. It's getting close to a (43/98)
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