{"id":44442,"date":"2019-03-13T08:41:18","date_gmt":"2019-03-13T13:41:18","guid":{"rendered":"https:\/\/olduvai.ca\/?p=44442"},"modified":"2019-03-13T08:46:02","modified_gmt":"2019-03-13T13:46:02","slug":"the-global-economy-is-a-time-bomb-waiting-to-explode","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=44442","title":{"rendered":"The Global Economy Is a Time Bomb Waiting to Explode"},"content":{"rendered":"\n

The Global Economy Is a Time Bomb Waiting to Explode<\/a><\/h3>\n\n\n\n
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Alejandro Mallea \/ Flickr<\/a><\/figcaption><\/figure>\n\n\n\n

In the aftermath of the greatest financial calamity since the Great Depression, then\u2013chief of staff for the Obama administration Rahm Emanuel made the call for aggressive action to prevent a recurrence of the meltdown of 2008.<\/p>\n\n\n\n

Although the U.S. government\u2019s system of checks and balances typically produces incremental reform, Emanuel suggested that during times of financial upheaval, the traditional levers of powers are often scrambled, thereby creating unique conditions whereby legislators could be pushed in the direction of more radical reform. That\u2019s why he suggested<\/a> that we should never let a crisis go to waste. Ironically, that might be the only pearl of wisdom we ever got from the soon-to-be ex-mayor of Chicago, one of those figures who otherwise embodied the worst Wall Street-centric instincts of the Democratic Party. But give Rahm props for this one useful insight.<\/p>\n\n\n\n

But we did let the crisis of 2008 go to waste. Rather than reconstructing a new foundation out of the wreckage, we simply restored the status quo ante, and left the world\u2019s elite financial engineers with a relatively free hand to create a wide range of new destructive financial instruments.<\/p>\n\n\n\n

To cite some examples, consider the case of the UK, where England\u2019s local councils have taken on significant risk via structural financial products known as \u201cLOBO loans\u201d (lender option borrower option). Financial blogger Rob Carver explains how they work<\/a>:<\/p>\n\n\n\n

\u201c[Let\u2019s] say I offer to lend you \u00a340 and charge you 3% interest for 5 years. Some other guy comes along and offers you the same deal; but the twist is he will have the option to ask for his money back whenever he likes.<\/p>\n\n\n\n

\u201cYou wouldn\u2019t borrow money from him because it\u2019s clearly a worse deal. \u2026<\/p>\n\n\n\n

 \u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

The Global Economy Is a Time Bomb Waiting to Explode In the aftermath of the greatest financial calamity since the Great Depression, then\u2013chief of staff for the Obama administration Rahm Emanuel made the call for aggressive action to prevent a recurrence of the meltdown of 2008. Although the U.S. government\u2019s system of checks and balances […]<\/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":[195,24655,8222,24656,24654,8738],"class_list":["post-44442","post","type-post","status-publish","format-standard","hentry","category-economics","tag-debt","tag-financial-instruments","tag-great-financial-crisis","tag-lobo","tag-marshall-auerback","tag-truthdig"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/44442","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=44442"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/44442\/revisions"}],"predecessor-version":[{"id":44443,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/44442\/revisions\/44443"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=44442"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=44442"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=44442"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}