Another banker's panic on the way?

That would be our old friend Satyajit Das, the derivatives expert in Australia and author of the terrific new book “Extreme Money,” who has been my best guide to the global financial crisis for the past four years. (To read my first interview with Das, in September 2007, click here . His forecast was way out of the mainstream then, but incredibly prescient.

In an op-ed piece published in Australia last week, Das argued that in global financial markets the signals have changed from green to red. But rather than a simple traffic jam, he argues that a full-scale credit crash may be ahead. In financial markets, facts never matter until they do but there are worrying indications. Market Watch

Skipping the technicals, the issue is that there is not enough real economic yield to support all the big banks, same as 2008. One way to think of it, consider the Treasury curve as a proxy for the bankers yield curve. When the curve shrinks, as it has recently done, there are too many bankers to fit along the network, so merging occurs. As the merging proceeds the fewer bankers along the curve have more curve space allocated and have more gain. Go look at the curve during the 2008 panic, the curve gets all bunched up.

But the bankers like to have anxiety attacks, and likely will show up at the central bankers office, peeing in their pants.