Bankrupted by a Shadow Banking System

[Post Summary]

But my beloved had turned away and was gone.
—Song of Solomon

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How Bad Is It? (Watch the four minute clip from CNBC's Power Lunch today.)

Jesse Eisinger speaks about a "shadow banking system." This is how he describes what are called "collateralized debt obligations" (CDOs). He is highlighting the "money-ness" of credit securities created on Wall Street. According to Eisinger, CDOs have the same qualities as a bank.

This notion of the "money-ness" of credit securites is something Doug Noland has written about for years now.

I bring this up because the so-called "shadow banking system" is the arrangement Washington is attempting to bail out. However, wiser minds believe it cannot be saved.

Last Friday's Credit Bubble Bulletin does a yeoman's job describing the nature of the crisis hitting the "shadow banking system." The details might not be your cup of tea. But understand. All things are not what they seem...

—Tom Chechatka