Financial Stability News

Flashing news about financial stability and central banking

The shadow banking system is imploding

Zero hedge and Reuter today has interesting posts on the greater implications of the Global MS bankruptcy. They point out that MS Global did exactly what Lehman and AIG did; leverage up in the repo market on bets that finally went bad. The fragility of the shadow banking system is exposed as banks now are scrambling for funds. This may just be the beginning of a total implosion of the London based practice of re-hypothecate client’s collateral.

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