fuagf, the very unfortunate reason interest rates have to be kept so drasticlly low? The Central Bank, as the Papa Bear of all the banks and financial markets, is directly responsible for loss of control in the derivative industry that built and built risk right under the nose of Alan Greenspan and especially Ben Bernanke. Debt, in history has gotten out of control many times but 'this time is different'. Now banks, hedgies, speculators, any and everyone, thought - thinks, they can assume levels of risk that otherwise would never be considered because they can 'insure' with derivatives, Credit Default and Interest Rate Swaps or spread the risk with Debt Securities or Obligation Instruments. This truely false sense of 'security' backed by no reserves in case of calamity, was allowed by the Primary Regulator, the Central Bank. All the players in the game are to blame, yes of cource, but in a normal free market they would pay for their mistakes. Failure is a good thing in a free market because it rids the sytstem of dumb participants, facilitates price discovery on assets, creates opportunity for well run entities, and discourages excessive risk. Too Big To Fail is the most ridiculous and destructive concept a financial market could ever become subject to, imho, because it takes away the very healthy mechanism to clear out the garbage, plow the field, and fertilize the garden of finance/business. But TBTF is alive and well and the very reason interest rates have to be kept low. If the few remaining survivors, the U.S. - Germany - China sort of, and the Multi-National Coporations can't grow more debt, at ultra low cost, then it is game over QUICK. That market of debt issuance has been leveraged to the max by SWAPS and such, just like every other market, so if the debt creation of new money were to become unworkable, like any other pyramid/ponzi scheme, failure comes suddenly when there is insufficient new money to service the clients uh... victims.
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