> Before the international banking crisis broke in 2007, the total face value of outstanding derivatives contracts was many times larger than the world economy itself.
It sounds bad, but it's not particularly hard to get into that position. If everyone just insures their home, the value out outstanding derivates on peoples is already 1x. Now add in everyone that has mortgage insurance that is protecting lenders on home defaults, and you're already beyond 1x for total outstanding derivatives.
Really? I had no clue that it was that bad.