Debt wobbles worldwide

"... some bright sparks pointed out there was this truly humungous pool of assets sitting around doing no work. In the financial world, moving money makes money. A little bit gets stuck to every hand it passes through. So trading vehicles were created to unlock the world of credit

A decent article. But what it misses in a big way is the role the central banks and other banking authorities played. This was not just a matter of "wild west finance": the authorities threw in ludicrously low interest rates, a dysfunctional dollar recycling complex established to sweep global trade imbalances under the rug, and ongoing lies about the true inflation backdrop. And far from being too clueless to regulate this "esoteric new world of finance", it is rather simple: it all comes down to value at risk, which the banking regulators define.

Proof that they knowingly loosened the rules exists in what has surfaced regarding SIVs -- that they are so widely used as to be considered market "infrastructure", yet are allowed to be established off-balance-sheet, undermining the while intent of capital reserves in banks. And now that crisis has hit, here in the US, the Fed is suspending all that remains of the reserve requirements for entities including SIVs for major banks that request it (such as Bank of America, Citi, Suntrust, and others).

This is all just scratching the surface. The "regulators" have been anything but. They've made the problem worse by setting the rules of the game for imprudence and unsoundness, and then providing an implicit government guarantee for the whole system. And now, through the Fed and various bailout entities (such as the Treasury's M-LEC or the Federal Home Loan Banks), they are making good on that guarantee, protecting the worst of the very offenders they created.