The BIS update on global shadow banking system is REALLY slow.
So far they only have data back from December 2008.
We do have US report here
occ.treas.gov
Unfortunately, my suspicion about the "cure" for the financial
crisis was correct. The report indicates the real values for
derivatives dropped sharply, while the notional values grew.
In other words, the "solution" was to re-liquify derivatives,
as usual. Of course, we knew that before.
Oh, and Goldman is by far the most leveraged US institution.
In other words, by pursuing the bailout of most leveraged
players the Fed and other Central banks assumed the role of
failed counterparty, such as AIG and FNM/FRE. The system is
still over-leveraged, printing led to even more leverage piling
on.
The financial nuclear bomb is still ticking. There is no
good solution, the derivative Ponzi scheme is too big.
What should they do? Instead of saving "too big to fail",
let the 5 top Fed overleveraged institutions fail. Let small
banks, those who have been prudent, replace them. Do not
feed the Ponzi with liquidity, encouraging even more money
for nothing.
Will the Central banks keep printing forever to prevent the
big implosion or is the big one coming? So far there is
no stress in derivatives, but the Big one is coming sooner
rather than later. The shadow banking system outgrew the Fed.
"The fix" was liquidity, not reform, which is no fix at all.
It's a patch, a duct tape. It will hold for a couple of
years, then we'll see the shadow system go ka-boom again,
unless measures are implemented to cancel contracts between
counterparties, while the real values of these have gone down. |
