rmenton

The Crash of 2008

After being asleep at the switch, the regulators are going to throw everything they have at the credit crunch. Yes, it's now a technical problem, but it is being fed by lack of confidence on a scale not seen for decades. Structurally, something needs to be done about the casino nature of OTC derivatives. Someway, somehow, we must disallow using CDS, CMO, IRS, etc to be gambled with, and by those who don't possess sufficient capital to assume their risk. The sea change is this, and overall cessation of leverage without capital. How any semi-intelligent regulator could think that something that trades over the counter and doesn't have to appear on a balance sheet, carrying the risk of these instruments, levered at staggering ratios is not a casino, is dumbfounding.