The Next Financial Tsunami Just Began in Texas

Saturday, April 18, 2015
By Paul Martin

F. William Engdahl
Journal-Neo.org
17.04.2015

he last financial Tsunami was a doozer that almost destroyed the global financial system. It was the collapse of the Wall Street Mortgage Backed Securities bubble in March 2007. The results of that collapse are still very much with the world today. Never in the one hundred some years of the Federal Reserve Bank has the Fed held interest rates at an artificial near-zero level for what is soon to mark eight years duration. Not even during the 1930’s Great Depression were rates kept so low so long. It is not a sign of a healthy banking system, friends.

Now a new Financial Tsunami is beginning, this one, of all places, in the Texas, North Dakota and other USA shale oil regions. Like the so-called US sub-prime real estate crisis, the oil shale junk bond default crisis is but the cutting front of the first wave of what promises to be a far more dangerous series of financial Tsunami long waves.

Banking system vulnerability greater

I say more dangerous because of what governments in the USA, EU and elsewhere did after 2007 to make sure no repeat of that bubble-cum-collapse-of bubble cycle could repeat.

In a word, they did nothing. What they did do—explode US Federal debt and bloat the credit of the central bank to historic highs leave the USA in far worse shape to deal with the unfolding crisis.

Aside from a few cosmetic face-saving new laws, they have done nothing. No CEO of a major criminal Wall Street bank went to prison. No mega-bank, “too big to fail” was forced to break up their trillion dollar balance sheet as they were after 1933 when the Congress passed the Glass-Steagall Act forcing banks to divest their in-house stock and bond securities businesses to avoid the same conflicts of interest that reemerged after Bill Clinton signed the Glass-Steagall repeal in 1999 and banks and insurance companies and investment firms merged into giants so large Congress was terrified to touch them. No law has been passed forcing disclosure of the off-balance-sheet bank derivatives positions. Like in 2007 it is all opaque, like bankers prefer.

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