Shadow Banking System: now grown to approximately $1.25 QUADRILLION dollars
Becoming a Banana Republic
In its depth and suddenness, the U.S. economic and financial crisis
is shockingly reminiscent of moments we have recently seen in emerging
markets (and only in emerging markets): South Korea (1997), Malaysia
(1998), Russia and Argentina (time and again). In each of those cases,
global investors, afraid that the country or its financial sector
wouldn’t be able to pay off mountainous debt, suddenly stopped lending.
And in each case, that fear became self-fulfilling, as banks that
couldn’t roll over their debt did, in fact, become unable to pay. This
is precisely what drove Lehman Brothers into bankruptcy on September 15,
causing all sources of funding to the U.S. financial sector to dry up
overnight. Just as in emerging-market crises, the weakness in the
banking system has quickly rippled out into the rest of the economy,
causing a severe economic contraction and hardship for millions of
people.
http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/307364/
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