Business

Why is it that when a banking crisis hits, everyone acts surprised?

The reason is actually quite simple: everyone at the top of the financial food chain are highly incentivized to keep quiet about the problems.

Central Banks, Bank CEOs, politicians… all of these people are focused primarily on maintaining CONFIDENCE in the system, NOT on fixing the system’s problems. Indeed, they cannot even openly discuss the system’s problems because it would quickly reveal that they are a primary cause of them.

Excerpted from Doug Noland's Credit Bubble Bulletin,

While there are numerous and often conflicting opinions about the underlying causes that lead up to the Great Financial Crisis, most agree that the proximal catalyst which finally exposed all the overvalued, illiquid "cockroaches" and confirmed that subprime "is not contained" in the process unleashing the chain of events that culminated with the collapse of Bear, Lehman and AIG, was the failure of one of Bear Stearn's credit-focused hedge funds in the early summer of 2007.

Here is how the conventional wisdom recalls this development:

Every year, roughly $1 trillion flows illegally out of developing and emerging economies due to crime, corruption, and tax evasion. This amount is more than these countries receive in foreign direct investment and foreign aid combined.

Submitted by David Stockman via Contra Corner blog,

The graph below belongs in the “what were they thinking category”.

After Tuesday’s dividend massacre, it’s plain as day that Kinder Morgan (KMI) wasn’t the greatest thing since slice bread after all. That is, a “growth” business paying rich dividends out of rock solid profit margins and flourishing cash flow.

In fact, it was just a momo stock on a borrowing spree.