Aitken: Low Rates and Regulation Drove Unconstrained Shadow Banking Leverage
James Aitken · James Aitken – Systemic Risk in a Crisis (Capital Allocators, EP.126) · Mar 18, 2020 · at 6:33
Macro strategist James Aitken discusses the structural conditions that led to the March 2020 market crisis on Capital Allocators with Ted Seides.
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“The cool eye of financial history might conclude that by driving interest rates to ridiculously low levels, while simultaneously driving financial intermediation out of prudentially regulated banks, We or policymakers perhaps effectively uncapped leverage in the system and motivated unconstrained growth of leverage in the non-bank sector. Which unfortunately conspired to set the stage for the painful reckoning that we're working our way through at the moment.”
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