The economist David Miles, who sits on the monetary policy committee of the Bank of England, may exaggerate when he forecasts financial crises every seven years, but most of the problems that caused the 2008 crisis — excessive borrowing, shadow banking and reckless lending — have not gone away. Too-big-to-fail banks have not shrunk; they’ve grown bigger. Huge bonuses that encourage reckless risk-taking by bankers remain the norm. Meanwhile, shadow banking — investment and lending services by financial institutions that act like banks, but with less supervision — has expanded in value to $71 trillion, from $59 trillion in 2008.
The ticking time bomb is derivatives – bankers and forecasters avoid telling us how much bad credit and unrecoverable debt is tied up in this bubble but when it bursts it will effect every bank and every bank investor/depositor. I personally believe this is the core of the paranoia that has bankers predicting future doom and gloom for for the global economy.
Picking up my jaw from the floor …..
THE Gordon Brown, the same one that over saw the massive almost unparrallelled over spend of the UK government that spent into a black hole, that sold the UK treasuries gold reserves at £10/oz in exchange for Euros, this same Gordon Brown, a life long socialist an former PM, this same socialist from the party that threw away any notion of immigration control, this Scotsman who undermined any sense of fiscal responsibility, that approved and encouraged the break up of the United Kingdom, that came from the scottish labour party ruling by entitlement and cronyism, this same rabid son of socialism feints shock at the state of a crony banking system.
May a plague and pox afflict this overseer and enabler of the destruction wrought in the land, the country of my birth, of my fore bearers, whose family blood was spilled in the defence of that sadly past realm.
DSV, you beat me to it. Brown makes reference to “reckless borrowing”. And what are the roots of Europe’s debt problems? Sovereign debt. And Gordon Brown was one of the biggest deficit spenders in British history. It’s truly dismal when a liar like Brown claims to be leading the charge for fiscal responsibility on the part of the banks. Rather than cutting program spending, Brown’s response was to increase revenues by pilfering the savings of pensioners.
Agree that this is a case of Gordon calling the kettle brown..
And Occam, it may interest (and dispirit) you to know that yesterday the Commodity Futures Trading Commission, the supposed regulator in the US of A of all things derived, admitted that they had undercounted derivative exposure by a measly $55Trillion dollars.
As actor, comedian, and sometime hockey player Denis O’Leary once sang “Merry f***ing Christmas!”.
cgh
With hindsight I guess Kate knew that the Gordon Brown article was chutzpah of the highest merit, therefore the name in the link.
Agreed, DSV, but I’m not going to second-guess Kate’s motives here. Ever since 2009, scum like Brown have been running for cover pretending that they were concerned about the problem. My dislike of this bloated bag of flatulence has no real limits. Koko in The Mikado was right; I have a little list, and Gordon Brown is on it.
“The G-20 plan for oversight of shadow banking is, as yet, only a plan. While the world’s $600 trillion derivatives market is being regulated with new minimum capital and reporting requirements, global financial regulators must “find a way to collaborate across borders,” Mr. Carney says.”
Good luck with that…
600 Trillion…meh pocket change, you can wall paper your bathroom with the stuff they’ll never be able to collect on that hellishly toxic brew. Now that greed has looted out the entire population what ever will the 0.0001% possibly do with it all?
Cheers
Hans Rupprecht, Commander in Chief
1st Saint Nicolaas Army
Army Group “True North”
When the next collapse comes it will make 08 seem like the good ol’ days. Everyone can experience the joy of being Zimbabwe with Greece being your rich uncle.
http://www.weeklystandard.com/blogs/americas-debt-greater-entire-eurozones-and-uks-combined-debt_636847.html
Isn’t “shadow banking”, as implied in the excerpt, just what we might recognize in another context as the free market at work, to get around regulatory obstacles?
Having said that, the comments above are spot on.