Shadow banking: still big, still dangerous
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- เผยแพร่เมื่อ 20 ก.ค. 2010
- The part of the financial system that lends the most money to Americans remains almost untouched by regulation. It's shadow banking, as Paddy Hirsch explains. #MarketplaceAPM #EconomicExplainers
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I can read and read and read about everything you explain and it all seems complicated and I retain only half of it. You draw a couple stick figures on a white board and explain in plain English and it all seems so clear and simple. Thank you for these videos.
this guy knows finance very well
you are an excellent teacher. thank you kindly sir!
Thanks for making these videos I will try to watch more.
Great video! Keep up the good work!
Great presentation!
why do we need deposit insurance to insure ones and zeors in a computer
Thank you, Sensei!!
You are Always the best.
Why did pension funds and other investors buy these packaged MBSs without doing any due diligence on the underlying safety of the loans? I've read that they relied on credit rating agencies like Moody & Poors. If so, why would credit rating agencies give a high rating to such shadow banks without understanding the riskiness of the loans that they were originating?
Paddy - bailouts solidify and validate future bailouts. Sure it'll help business in the short term, but the moral hazard and debt accumulation required to bail them out far outweighs the benefit.
If the massive banks were let go, people could still bank the next day. Its happend before. Investors would be pissed off, but this is how its supposed to work. The poorer, ordinary people of the US are forced disproportionally to give a higher % of their income to the richest people in society.
What is riciculous is that the banks (and financial corporations) aren't subject to the same competition regulation as non-financial corporations (tech f.ex.)
If a bank is so big it will crash the entire financial system of a country if it fails, it can not be allowed to take risks that could crash it. If it does it's dangerous recklessness and incompetence, or undermining national security.
Hello Mr. How many white board markers do you buy every week?
So, if a converged bank runs into trouble, what's stopping them from transferring bad debt of their uninsured shadow bank arm into their traditional insured(by tax payers) bank and the moving the "good" debt into their shadow bank arm?
Very "simple" yet deceptive. Standard banks that we all "know and love" do not lend out the money we put in, rather they lend out 20 times the amount we put in, or more. Which is why they are also very dangerous - he doesn't explain this practice. I wonder why?
Because of fractional reserve banking...
Shadow banking + Dark pools + Under the table deals + unregulated activities = the real economy
Countrywide, Coldwell Banking, Nationwide? I didn't even know these were just unregulated banks.
Look at the problem with Credit, there is 14 trillion dollars in Personal debt but world wide there is only 4 trillion dollars. So how can the banks loan more than there is?
Is it a matter of a bank loaning money or accrued interest?
@theDeckisStacked "This would increase the value of money tenfold" ? surly that depends on the amount of money in circulation? If the FRB system was abolished wed have to decide where to start again, then either pin the value to something (gold / ron paul) or (fairly manage the supply as needed / bill)? both options imo are far better than the debt backed nonsense we currently have. oh btw i didnt realise bill had a channel, I will do some research ;)
I'm puzzled...how can lend almost twice as more then our GDP which is 15 trillion @APM Marketplace
too big to fail implies we don't have a choice. we do. we could let them fail and deal with the fallout by restructuring
@chillercm
Depositors get the money, but I am talking about Investors. People who OWN the bank either as regular owners for private banks or shareholders of the corporation for public banking companies. Why should they get welfare? Investors are supposed to know they are taking a risk and they would lose, but not anymore, they go whining to the feds & get billions.
Also not just Americans are in also rich foreigners
Banks don't lend depositor's money. This is not how banking works, re modern money mechanics.
"I put my money in the Bank every month like a good citizen.." - so if I don't use a Bank then I am a bad citizen?
@DCUPtoejuice No we don't have a choice and it's not because they are 'too big to fail' it's because they have paid not to fail. Pay your congressman more bribes than them and you can have what you want.
@BlacksAreBeautiful
Shadow bank means its not a depository bank. They get their money from investors. To your question, not neccesarily.
This aged very well.
Who watching this in 2020.
@ChefEarthenware No, you are known as a smart citizen.
This video is not correct and it is improper education
Please tell why
Razor1602 @1.10 Paddy explains that commercial banks get their money from depositors and then issue it as credit. The process is actually quite different. The savings are not touched,i.e. there is no decrease in savings as the banks issue a $400,000 loan for example. The Loan then goes into circulation but it eventually gets redeposited as a check in the same bank or another bank. In order for the first bank to balance its books it borrows from the banking system. The Counterfeit Credit Electronic Money is just created ex-niholo. There are many articles on this. Also There are empirical economic models that show that fractional reserve banking is a myth. but in fact. banks are just loaning money out of thing air.
Great thanks for the info.
Razor1602 Dont you want details?
Yes but I thought that that was all you wanted to say. I figured I would look it up later. But yes some details/links would be great.