Fighting the last war is always a problem.

Where is the risk sitting these days?

Some people think it’s still sitting on bank balance sheets – but there’s an argument that the cumulative effect of Basel capital structure adjustments and Dodd-Frank has reduced that significantly since the GFC.

Some people think it’s sitting in ETFs and ETPs, because some have high levels of liquidity despite being made up of illiquid debt instruments. It’s all interesting conjecture.

No one really knows, and the people who do know and are making bets against those instruments which are the riskiest are probably unknown until those bets pay off massively and there is a John Paulson of 2016 and another investigative book for Michael Lewis to write about how the GFC happened but all these lessons were forgotten in just 6 short years.

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