This is a story from page 2 in yesterday's journal. It may be one for the history books... after 'the crash' where people say "but there was no warning", some will point to a few buried stories like this one.

The bold is my emphasis.

What I take from this is the system is so complex few undertand it any longer, and even fewer know how to fix it if it springs a leak or refuses to flush.

If you bamboozle enough people with fiat (the whole world has embrace it) and other forms of vapor wealth, pretty soon you bamboozle yourself! As when a man lies habitually, he loses the ability to recognize the truth.

Financial
Plumbing
Draws Alert

LONDON -- Banks and settlement-and-payment systems: Take care of your plumbing.

That was the message of central bankers from around the world, who said that banks and settlement-and-payment systems need to better account for what would happen if their infrastructure failed within their stress tests, funding requirements and crisis-management plans.

The risk of failure within the world's payment-and-settlement systems is becoming more pronounced because they are becoming increasingly interconnected, according to the Bank for International Settlements, which comprises central bankers from 55 countries. As a result, the resilience of the global payment-and-settlement network depends on effective management of infrastructure risks by the people that provide and use these services, the bank's Committee on Payment and Settlement Systems said in a report.

"Systems underpinning global financial markets are becoming more interconnected in increasingly complex ways," said Timothy Geithner, president of the Federal Reserve Bank of New York and chairman of the committee.

Yet the committee said that management of these risks may be difficult because the overall system and its potential faults are becoming more difficult to understand and the companies that run these systems may feel less incentive to address this area.

The committee said system operators, banks and service providers must incorporate the possibility of failure into broad risk-management policy -- and there needs to be more coordination among payment-and-settlement systems.

The committee noted that some system operators have started to react by developing their risk-management processes, encouraged by central banks and other public authorities in part through the use of international minimum standards.

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BK