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Odin

The True Size Of The Shadow Banking System Revealed (Spoiler: Humongous)

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The True Size of the Shadow Banking System Revealed (Spoiler: Humongous)

The shadow banking system is vastly bigger than regulators had thought, say econophysicists who have developed a powerful new way to…

https://medium.com/the-physics-arxiv-blog/5e1dd9d1642

1) Econophysics? WTF?

2) This sounds like total ******: "If the size of these firms followed a power law, the largest would be ten times bigger than the 10th on the list. But that isn’t the case." It's not true of countries, it doesn't appear to be true of listed companies. Their application of the power law is at best misguided.

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I expect 'shadow banking' resides in the same part of the universe as Dark Matter which is estimated to consist of 84.5% of the total matter in the universe .

Nice chart , is that $3 000 billion at the top ....could it be tucked away in the derivatives on Deuchsche Banks Balance Sheet ?

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1) Econophysics? WTF?

2) This sounds like total ******: "If the size of these firms followed a power law, the largest would be ten times bigger than the 10th on the list. But that isn’t the case." It's not true of countries, it doesn't appear to be true of listed companies. Their application of the power law is at best misguided.

1) They seem to be trying to apply science to economics. Yes it does sound a bit like star trek speak, however I don't believe coming up with new theories is bad, no worse than the roulette pieces of so called straight economists.

The Shadow Banking System, is the "Dark Matter" of the universe, hence the physics reference ?

2) Well they claim that ordinary corporations follow this rule, and so do banks (in the lower tiers). Just not those up at the top, then explain what (they think) this must mean.

I have no idea if the claim is true, I am just a lay-person of economics, but I know counting the same inventory of stock twice (once from the front of the rack, and then again from behind the rack) when I see it. Maybe the SBS allows for many more than 3-dimensions, so they get to count it even more times.

The piece is food for thought.

Edited by Odin

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Sounds plausible to me. Anyway it's like arguing the weight of the van that's just crushed you to death. Was it 7T or 9T?

Edit : - Spelling.

Edited by XswampyX

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Off Balance Sheet fancy footwork to pump up Balance Sheets in all industries , not just banking has been one of the obsessions of bean counters for many many years . Trying to pin down unknown unknowns is always going to be a tricky business . Out of curiosity I will have a good look through the article when I am not so tired , and subsequently respond in more detail than the flippant comment I made above .

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