Is The ‘Shadow Insurance’ Business As Dangerous As The ‘Shadow Bank’ Of The Financial Crisis?

There are a number of striking similarities between financial markets before the 2008 financial crisis and today. The most obvious is the low level of volatility. While everyone’s favorite indicator of risk taking is the VIX, other metrics of risk and uncertainty are even lower today than they were in 2007. For instance, the metrics of interest rate volatility today are much lower than in 2007, and could probably be the lowest ever on record.

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But there are many other parallels. In 2007, the prevalence of “Structured Investment Vehicles,” or SIVs, are ascribed some degree of blame for the ultimate unwinding of credit leverage. …

Is The ‘Shadow Insurance’ Business As Dangerous As The ‘Shadow Bank’ Of The Financial Crisis?