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Although the stock market has battled back as investors close out the jittery month of July, the recent gyrations in the stock and bond markets still has Wall Street on edge. Indeed, the fear is that last week's pyrotechnics could be just the prelude to something even more serious. The question Wall Street has been asking: "Is this the big one?"

By "big one" people are referring to a meltdown in the multi-trillion dollar derivatives market — a financial crisis that would rival the Asian contagion a decade ago. Such an event would send interest rates careening higher in the short-term — sending stocks and the housing market cascading lower. It would also blow out dozens of hedge funds and would likely only come to an end when some financial player — a bank, Wall Street powerhouse, or some other entity deemed "too big to fail" has to be bailed out by the Fed or Uncle Sam.

Sounds preposterous? After all, it was less than two weeks ago that the Dow Jones industrial average closed above 14,000 for the first time in history. Yet that's what this past week's vicious market action has been foreshadowing.

The stock market is channeling the possibility of a severe credit collapse. It's the reason why equity prices from Seoul to Paris were rocked this week — even though there is no housing recession in those markets, or in much of the world outside the United States. It's why the Blackstone Group, a private equity firm whose lifeblood is credit, has lost more than 1/5 of its value since going public just one month ago. It's why KKR, which was planning a much more conservative public offering (it wasn't solely designed as a cash-out for the partners), may have to scrap its IPO.

And it's why TheStreet.com published the unthinkable story under this headline Friday: "Wall Street Bonuses in Peril." OK, got your attention now?

Yes, there are very serious concerns that this may indeed be "the big one." What's most disturbing is that the brightest minds on the street, veterans of other financial panics and credit seizures, readily admit it's virtually impossible to see the forest for the trees.

Ray Dalio of Bridgewater Associates, a venerable hedge fund manager who shuns the spotlight and the charity circuit, but who has one of the most solid records you'll ever find, told investors on Friday that he and his colleagues embarked on an extensive study a few months ago to determine the extent of the derivatives risk.

Their conclusion: "no one has a clue." And no wonder. According to Dalio's calculations, derivatives exposure rose more than four-fold in the last five years to a staggering $400 trillion. Yes, that's trillion with a "t" ... in other words, 30 times the entire gross domestic product of the U.S.!

That's why the smart money took money off the table in the month of July. Sure, the markets may snap back and vault to new records just like they did this spring. But with the extent of the risks out there so opaque, it may not be worth the gamble.

Terry Keenan is the anchor of "Cashin' In" and is a FOX News Channel business correspondent. Tune in Saturdays at 11:30 am ET, and find out what you need to know to make your money grow and keep what you already have!