Bill Gross, head of PIMCO, is credited with coining the term “Shadow Banking System”. A few years ago he warned about its reckless behavior and how they could wreck the Economy.
Bill Gross Calls it “Shadow Banking System”
Bill Bonner, The Daily Reckoning Australia — Jan 22, 2008
Banks recognize that not all their loans will be repaid. They operate on margins of safety, with reserves set aside for when things go wrong. But in the worlds of swaps, hedge funds and derivatives…slick operators can invest billions with no margins of safety…and no reserves. The result, Gross says, could be catastrophic.
Turns out this blunt-speaking Mutual Fund Manager — WAS Right!