14
Christopher Whalen, “Central Banks, Credit Expansion, and the Importance of Being Impatient,” Kroll Bond Rating Agency, March 20, 2015.
15
In Europe, there is an even bigger risk in entrusting one’s money to banks. As the citizens of Cyprus learned, their savings can be confiscated by the government. This calls into question the integrity of the banking and the financial system and the very tenets on which society is organized and is almost certain to lead to social unrest and violence.
16
Luigi Buttiglioni, Philip R. Lane, Lucrezia Reichlin, and Vincent Reinhart, “Deleveraging? What Deleveraging?” Geneva Reports on the World Economy, Centre for Economic Policy Research, International Center for Monetary and Banking Studies, September 2014, 1–2.
17
Ibid., 2.
18
Ibid.
19
McKinsey, “Debt and (Not Much) Deleveraging,” vi.
20
Dr. Philippa Malmgren,
21
Bank for International Settlements,
22
Ibid., 5.
23
Ibid.
24
David Enrich, Jenny Strasburg and Eyk Henning, “Deutsche Bank Suffers From Litany of Reporting Problems, Regulators Said,”
25
James Rickards,
26
Francis Fukuyama,
27
“Transparency” is one of those terms that regulators like to use to impress their political bosses that they know what they are doing. The problem with “transparency” when applied to derivatives is that there are very few regulators with the requisite expertise to understand what they are looking at when the curtain is pulled back on these complex financial instruments. Just because regulators are provided with a mountain of data on derivatives does not mean that they possess the ability to understand the information with which they are being provided. In fact, we can virtually depend on the fact that they do not. This is something that the decision makers who decided to leave derivatives in the hands of regulators after the crisis failed to understand.
28
Source: Bank of International Settlements,
29
The Barclays High Yield Index was approximately $1.3 trillion in par amount outstanding in October 2014 while the S&P/LSTA Leveraged Loan Index was approximately $825 billion in mid-December 2014.
30
Only in late 2015, long after the damage was done, did the Justice Department move to adopt formal guidelines designed to foster indictments of individuals responsible for corporate wrongdoing. The new policy, set forth in a memorandum to federal prosecutors from Deputy Attorney General Sally Quillian Yates dated September 9, 2015, states that settlement agreements will not give companies credit for cooperating with the government unless they turn over evidence against employees involved in wrongdoing.
31
“Financial Crimes: Unfair Cop,” The Economist, May 23, 2015, 13.
32
Charles Kindleberger,
33
Charles Krauthammer, “Are We Alone in the Universe?,”
34
The National Military Strategy of the United States, June 2015, 2.
35
Thomas Friedman, “A Good Bad Deal,”