The Shadow banking system in the United States was according to one blogger “the definition of utter insanity.” And responsible for concealing leverage which led to non-market-based, faux unsustainable GDP growth, housing price and overbuilding bubbles and devastating mortgage foreclosure and property tax base wreckage in its path.
Unless you are aware of its impact on every type of asset and account, you and your financial, tax and legal advisers are missing quite possibly the most essential information for securities claims. It is the indispensable explanation for real estate, stock market, bond, commodity and currency market performance from 2004 to today 2013.
The size of the Shadow Banking System and entities therein and huge regulatory failures in oversight caused major distortions in Money market fund sweep accounts, Bank Insured Deposit Accounts, Auction Rate Securities, ABCP Asset backed commercial paper, especially SIV-issued ABCP, RMBS, CMBS, CDO’s, CDS, Stocks, Bonds, Residential Real Estate and Investment rental properties.
The Federal Reserve’s QE3 still buys $85 Billion of Mortgage securities every month, that’s a trillion dollars of RMBS a year. Since the Fed has been supporting the Treasury and MBS market since 2009, today as of July 2013 the Fed owns well over $3 Trillion on its balance sheet. Why, now, if everything seems fine, would this never been done before action be necessary? Or is there another shoe to drop? Or why is the Fed’s inter-bank interest rate still at zero?
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