What is the value of Earth? If we price everything, and add it all up, what do you think the value of the planet would be?
I've heard that the value of America was about 50 trillion dollars, which is certainly a better estimate than 5 or 500 trillion. And I'll go out on a limb and say Europe and Asia are worth as much, and 50 trillion for the rest, bringing the grand total to about 200 trillion.
What is an interest rate swap? An interest rate swap is (most generally) when one party trades the interest payments on a fixed rate debt for the interest paid on a floating rate debt. One side is betting interests rates will go down, and so wants the payments of a fixed rate debt, and the other side is betting they will go up, and so will get the increased payments from the floating rate.
In a manner similar to many other derivatives, the debt payments in question don't actually have to exist, it is all a sort of pretend.
Hopefully you are asking "What's this got to do with the Value of Earth?"
The total value of the debts being paid off in the Interest Rate Swaps market is greater than the Value of Earth.
This is bad, and like the Credit Default Swaps market, as long as most things are moving along normally, there is no sign of any danger.
Personally, although I benefit from the trade, I'm not entirely convinced that any derivatives should be legal, but allowing that you can insure your ownership in companies (the value of a stock is insured with Put and Call options, the most basic type of derivatives) and your bonds, then I'm pretty darn sure that people who don't own the underlying paper(stock, bond, whatever) shouldn't be allowed to hedge(insure) the position implied by the ownership of the paper.
This is really serious. So is the FX market, but for different reasons.