> It does feel like this is where the systemic risk may have gone.
It's... kind of supposed to?
Take SVB, for instance. What they should have done is use derivatives to hedge their exposure to interest rates rising. They should have transferred the risk to other parties that either had the opposite exposure, or else were willing to take the risk for the right price.
Now, as we saw in 2008, all kinds of eldritch horrors can hide in derivatives, and the lack of transparency makes it very hard to see problems coming. And even in the case of SVB, that would still have left them with the counterparty risk. But the derivative market is where the risk is supposed to go, because it's the place that's supposed to be in the business of handling it.
We'd prefer any derivatives crisis to blow up only some unloved hedge funds, fly by night banks, and dumb sovereign wealth funds, but it turns out they keep selling on risky assets to unsophisticated investors. Like interest rate swaps.
https://www.usnews.com/opinion/blogs/economic-intelligence/2...
https://en.wikipedia.org/wiki/Local_authorities_swaps_litiga...
The "bubbliness" doesn't match 2008. For one thing, there hasn't been a build boom to try to cash in. My personal opinion is that we've absorbed another systemic shock - the war and sanctioning of the Russian economy, and especially the European gas price shock. That's still propagating through but the effect is diminishing rather than increasing.
(my slightly cynical take is that anything the news tells you to be scared of is probably not a threat, and that the real threats are surrounded by protective clouds of optimistic hype)
> the individuals involved care 100% about their own power and status, and close to 0% about the working public.
The American Way, surely?
It's not necessarily the case that local banks are safer. The US "savings and loan crisis", Spanish "cajas" etc.
> The other elephant in the room is the astronomical amount of money in derivatives, and their lack of transparency.
It does feel like this is where the systemic risk may have gone.