Author of THE DEBT GENERATION
Some time ago (May 2012) I wrote two articles about ETFs suggesting they were The Next Accident Waiting to Happen. In that first part I described how they work and who owns and runs them. My argument was that,
I think the signs are already there to suggest ETFs are where the instability and risk is accumulating. If I am in any way correct then ETFs will be to the next stage in our on-going state of siege-mentality crisis what CDOs were to the last.
In part two I looked at exactly how,
…the clever boys and girls of finance have found ‘innovative’ ways of pumping those ETFs up a bit, just like they did to Securities.
I detailed the alarming number of different ways ETFs and their market are being mutated into a monster of instability just as securities, CDOs and the like, were before them. I wondered about how many ETFs would be stuffed with high-risk sovereign bonds but held with a risk weighting of zero? I ended by suggesting that the claims being made for ETFs, of access to high returns via a product that massages away the risks, was as false now as it was when the same was said of mortgage backed securities in 2007.
I ended by saying, ...