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Systemic Risk in Wall Street

December 9, 2011

Econometric Measures of Connectedness and Systemic Risk in the Finance and Insurance Sectors by Monica Billio, Loriana Pelizzon, Andrew W. Lo, and Mila Getmansky is a project that tries to come up with hard definitions of interconnectedness and systemic risk in the financial industry.

Too me, one of the most appealing is the data posted on these two charts which show financial industry interconnectedness in the 90s, and then prior to the 2008 crisis. The dramatic increase in financial ties between banks, hedge funds, insurance companies and other investment companies is remarkable. By 2012, it is unlikely that risk is less.

In the meantime, the United States government and the declining wealth of the American people continue to back efforts to sustain the system in a massive looting operation. The world is hurting, but the American people are hurting most. What wealth exists is on paper. If you have physical gold and silver, you should hide it well, since most governments have the declared the “right” to confiscate that wealth.

systemic risk 1994 1996

systemic risk 2006 2008

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