[1]
Takeaway
- The shadow banking system is an unregulated, unreported mechanism that has been built as a financial transmission device
- A Black Swan event, such as a municipal or Euro sovereign default or a Middle East trade blockage, could cause the asset bubble to burst
Takeaway
- The shadow banking system is an unregulated, unreported mechanism that has been built as a financial transmission device
- A Black Swan event, such as a municipal or Euro sovereign default or a Middle East trade blockage, could cause the asset bubble to burst
Since last October, the stock market has been on a run. The Federal Reserve is now taking credit for the rebound, claiming it was an outcome of the monetary leap forward known as Quantitative Easing [2]. By its own admission, the Fed is promoting financial leverage and doesn’t know the extent to which it is creating an asset bubble — a responsibility it now has the obligation to monitor and control.
So far, so good. But McCombs Professor Lew Spellman cautions that a Black Swan event could eventually lead to asset deleveraging. Read more at his blog, The Spellman Report [3].