The Greatest Story Never Told: Swaps and the Risks Involved

Once in a while i have to smack my self for falling into a false sense of security. This post is one of those external  reminders to help me not forget.

So we had a balance sheet recession and in response the fed and the taxpayer bailed out the system.

The cause of this balance sheet recession was due to an enormous amount of on and off balance sheet liability tied to the housing market.

Now, that we have forgotten about off balance sheet talk it is business as usual for the crooks.

Nobody went to jail, the banks get a free ride off of the taxpayers back, and the only ones who benefit from this environment are large corporations and the banking system.

The large corporations have refinanced mostly all outstanding debt down to historically low rates while the banks get to use the free money to speculate.

This speculation has some effect upon CPI. It is inflationary no matter how statistics are jiggered.

Now in a truly capitalistic society the banks would have gone bankrupt. But the bankruptcies would have been so wide spread that there would be no financial system left. We had to act plain and simple.

We in effect nationalized the banks without having any of the transparency or controls that would have come from nationalization.

The question remains; why are we still keeping a ZIRP policy going? Why would we take such high risks?

There is only one answer. The black hole that caused the crash is largely still present.

There is no other answer. If it were not there then the banks would lend money to the private sector at a rate similar too or better than it was before the crash of the system.

While this seems plainly obvious, the boob tube is doing a good job of moving the American people further away from worry over the entire topic.

Here is a great video on balance sheets and gimmickry;(8 minutes for ADD readers.)

Notional value on SWAPS is something to be concerned over. Not having disclosure or transparency is something to be concerned over. Not insisting upon said disclosure and regulation thereof will cause another melt down in the system.

The question is when will the glass menagerie fall again?

[youtube://http://www.youtube.com/watch?v=UmNV8_VBGX0 450 300]

 

 

 

 

 

 

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