November 5, 2015
Regulators came up with a long list of contributing factors to the financial crisis of 2007-08. But what if all these factors are only symptoms of one underlying, much more fundamental issue?
Deutsche Bank recognized that for 31 billion Euros of recorded assets, it lacks fundamental information for a precise valuation. Can we still trust in the accounting of limited liability companies? (Photo: geralt)
In this article, we want to draw your attention to a seemingly small flaw in the design of our economic architecture. One that did not matter for a long time, but that has become extremely destructive over the past decades. The most recent banking crisis is a direct consequence of this flaw, and if we do not deal with it, we will have to live with an increasingly fragile financial system. The issue we are talking about has been hard coded in an underestimated but critical component of our economy’s operating system: Limited Liability.
Continue reading “The small bug that crashed our economic system” »