Since the crash of 2008, huge attention has been paid by regulators to systemic risk, the risk that some event will cause the crash of the entire banking system, not just of an individual bank. Tens of thousands of pages of financial regulations have been written, and almost as many thousands of speeches have been bloviated, about how we now understand the dangers of “too big to fail” and therefore a crash such as occurred in 2008 can never happen again.Needless to say this is nonsense; systemic risk is worse now than it was in 2008. What’s more, the next crash will almost certainly be considerably nastier than the last one. – continue reading HERE
