The global derivatives market is big. Really big. So big – and so unregulated – in fact that no one really knows exactly how big it is, but the very best estimates put the notional value at $1.2 quadrillion dollars. That handily beats the entire world's "GDP" of $71.8 trillion. The number is so big that it really defies anything on a human scale. Humans don't do quadrillions of anything – at least not usually.
Or think of it this way: There are about 2 quadrillion stars in the "El Gordo" cluster, the largest cluster of galaxies we've observed so far. The derivatives market is galactic in scope.
Or, consider that there are about 1 quadrillion ants living on Earth. If you put all the ants and all the people into two big piles, they'd be about the same size. $1.2 quadrillion buys every ant on Earth a ride on a crosstown bus.
As fun as these things are to think about, this $1.2 quadrillion matter is not to be taken lightly. The derivatives market is largely unregulated. In fact, it's so unregulated that the U.S. Congress, on the advice of investment banks, made it largely illegal to regulate derivatives.
The risk in this market is overwhelmingly concentrated in the United States, and it's getting worse. In 2011, a mere four banks held 95.9% of U.S. derivatives. Talk about a bull's-eye.