Quote:
Originally Posted by Relentless
Now if they would put capitalization requirements for banks in place,...and regulate new paper bubbles like the student loan market to prevent the next crash, I'd be optimistic for a change.  |
Longish post, but I've studied the shit out of this. Please read.
Too Big To Fail (TBTF) banks and the massive derivative bubble are
by far the biggest threat to not only US, but global economic stability.
As long as the TBTF banks are allowed to take insane risks with depositor's (and with bailouts, ALL of our) money, the question isn't IF there will be another major catastrophe, but WHEN.
This is exactly what caused the 2008-9 financial crisis.
The only solution that makes sense is to re-instate the Glass-Steagall act (repealed in 1998), which separated retail banking from investment banking. It kept us safe from major financial catastrophes for 65 years.
The student loan bomb is very important as it's getting close to $1 Trillion. But that's nothing compared to the derivatives market, which currently stands at $1.2 Quadrillion. $1.2 Quadrillion = 20x global GDP!!!!!!!
What are derivatives?
(Longer Version) Short version, it's a giant casino where you can bet on virtually anything, like the amount of rain Brazil will get in February 2014. No joke. And it only costs 1% of buying the underlying security. That is leverage on ultra-mega steroids.
Derivatives called synthetic CDO's (collateralized debt obligations) and CDS's (credit default swaps) were the core of the financial crisis. The size of the derivatives market has doubled(!) since then.
And you know what? The Commodities Futures Moderization Act of 2000
made it illegal to regulate these financial weapons of mass destruction.
This is what happens when you let banksters highjack your government. This is non-partisan. It's been going on through a succession of administrations/congresses for 30+ years.