J. D. Swampfox

Fully Invested, No Bottom in Sight

"The policy of subsidizing private debts, or transferring them to the public balance sheet, is still alive and well. But ...– the debts linger in one form or another, rather than being written off, restructured, or swapped for equity.... Piling debt onto the balance sheet of the federal government does not remove the obligation, and concentrates the risk of a failure that would be a true systemic event."

Boy the writer said a mouthful there. Governments are assuming that non-systemic risk (particularly related to their bonds) of individual firms "might" be systemic and so they take it on as a liability of the taxpayers and make it systemic officially. The problem is that once its systemic, we can't diversify it away...