Some banks have been trading on a 30:1 debt/capital ratio, which, in English means that for every $1 billion in share capital they would borrow, and lend, $30 billion.

But if you really want to be really scared then consider the totally unregulated credit defaults swaps market, which is what took down the largest insurance company in the world, AIG.

The credit default swaps on Lehman Brothers were unwound on Friday, and the auction to determine the size of the settlement set a value of 8.625 cents on the dollar for the debt. According to Bloomberg more than 350 banks and investors were involved, and nobody really knows who is going to get shafted. One estimate is that the auction may lead to payments of more than $270 billion.

Or not. There may be banks and investors who will go broke as a result, and we won’t know until the settlement date…

I know we have the 12 year Trade Cycle but he says the events that caused this meltdown are not the same.

Too much lending by Banks, too little notice of what was going on by the FSA and the
U.S. equivalent and the growth of Hedge Funds and Derivatives unprecedented.

Some Banks have apparently lent more than their Assets!!!!

The particular form of extreme capitalism we have been living with since Thatcher is having an excellent shot at putting us back to what people went through in the Great Depression, but it doesn’t have to be like that….

There is no shame among the greedy people , they are not Marxist, just Capitalists.