{"id":12263,"date":"2015-09-15T06:23:45","date_gmt":"2015-09-15T11:23:45","guid":{"rendered":"http:\/\/olduvai.ca\/?p=12263"},"modified":"2015-09-15T06:23:45","modified_gmt":"2015-09-15T11:23:45","slug":"the-next-financial-crisis-wont-be-like-the-last-one","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=12263","title":{"rendered":"The Next Financial Crisis Won’t be Like the Last One"},"content":{"rendered":"

The Next Financial Crisis Won’t be Like the Last One<\/b><\/a><\/span><\/h3>\n

<\/i>It seems increasingly likely the next Global Financial Meltdown will arise in the FX\/currency markets.<\/i><\/p>\n

Central banks are like generals: they tend to fight the last war.<\/b>\u00a0The Great Financial meltdown of 2008 was centered in\u00a0too big to fail, too big to jail<\/i>transnational banks and other financial entities with enormous exposure to collateral risk (such as subprime mortgages), highly leveraged bets and counterparty risk (the guys who were supposed to pay off your portfolio insurance vanish in a puff of digital smoke, leaving you to absorb the loss).<\/p>\n

In response, the central banks and treasuries of the major economies “did whatever it took” to save the private banking sector from insolvency and collapse.<\/b>\u00a0In effect, central banks launched a multi-pronged bailout of banks and other financial heavyweights (such as AIG) and hastily constructed a clumsy and costly\u00a0Maginot Line<\/a>\u00a0to protect the now-indispensable private banks from a similar meltdown.<\/p>\n

The problem with preparing to fight the last war is that crises arise not from what is visible to all but from what is largely invisible to the mainstream.<\/b><\/p>\n

The other factor is what’s within the power of central banks to fix and what’s beyond their power to fix.<\/b>\u00a0Correspondent Mark G. and I refer to this as\u00a0the set of problems that can be solved by printing a trillion dollars<\/i>. It’s widely assumed that virtually any problem can be fixed by printing a trillion dollars (or multiple trillions) and throwing it at the problem.<\/p>\n

Yes, the looming student-loan debacle can be fixed by printing a trillion dollars and paying down a majority of the existing student debt.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

The Next Financial Crisis Won’t be Like the Last One It seems increasingly likely the next Global Financial Meltdown will arise in the FX\/currency markets. Central banks are like generals: they tend to fight the last war.\u00a0The Great Financial meltdown of 2008 was centered in\u00a0too big to fail, too big to jailtransnational banks and other […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[9045,124,127,1909,195,312,9044,6515,481,4924,6333,690,3900,2721],"class_list":["post-12263","post","type-post","status-publish","format-standard","hentry","category-economics","tag-aig","tag-central-banks","tag-charles-hugh-smith","tag-counterparty-risk","tag-debt","tag-financial-crisis","tag-fxcurrency-markets","tag-global-financial-meltdown","tag-leverage","tag-oftwominds","tag-private-banks","tag-risk","tag-student-loan-debt","tag-us-treasuries"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12263","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12263"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12263\/revisions"}],"predecessor-version":[{"id":12264,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12263\/revisions\/12264"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12263"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12263"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12263"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}