RT coverage of Occupy Wall Street

OWS protesters thrilled and chilled

RT,
31 October, 2011

Scott Olsen is slowly recovering. However, his plight has built solidarity among protesters and set their spirits afire. Meanwhile, the endurance and tenacity of activists was tested as a blast of winter weather hit New York over the weekend.

?The Iraqi war veteran Scott Olsen, who was critically injured by police during an Occupy Oakland demonstration, is making minor improvements. Doctors have upgraded his condition to fair, although he remains in intensive care.

Keith Shannon, Olsen’s roommate who also served with him in Iraq, said he had visited his friend in hospital and that he “seems to be doing well” and that doctors expect him to make a full recovery.

Police are investigating how Olsen was injured amid nationwide rallies in support of the injured veteran.

It appears that Olsen’s injury by a police projectile has garnered even more sympathy and support for the movement that began in New York and escalated into a global protest against corporate crime and government complicity.

People across America are showing their support for the movement by sending protesters in Zuccotti Park  thousands of letters and parcels containing warm clothes.  As of last week, protesters had received some 2,000 letters, the Associated Press reported.

The camp in Zuccotti Park in Lower Manhattan was hit by snow, heavy rains and winds blowing up to 60 miles per hour. Hundreds of protesters have braved the freezing temperatures huddled inside their own  tents or under tarps that were erected over a part of the park. 

On Friday, New York City’s firefighters seized at least six generators and dozens of cans of gas from the Occupy activists. Protesters had brought the generators to the park to protect themselves from anticipated cold weather.

City officials say the generators violate the fire safety code and are a hazard. Activists are threatening to take legal action if the generators – their property – are not returned.

The protesters, who have vowed to remain in Lower Manhattan throughout the winter, are accusing NYC Mayor Michael Bloomberg of attempting to end the occupation by creating a public health risk.

Christina Tobin, founder of the US-based Free and Equal Elections Foundation, says the demonstrations are the "beginning of a bigger movement.”

“There are anti-union protests, there are anti-corporatists protests, and what we really need to have is anti-politicians protests here in the United States," she declared.

She says "people in office" are the real problem for the US.

“Once we address that issue and we kick them all out of office, people will see more of the origins of the Constitution, which I feel is what taxpayers really want," she added.

Meanwhile, in Denver over the weekend, police moved into an Occupy encampment arresting demonstrators who had allegedly ignored orders to leave.

The arrests came hours after a standoff between activists and the authorities near the steps of the Colorado Capitol. The clash resulted in police reportedly using pepper spray and rubber bullets against protesters. Twenty people were arrested in what is being described as an ongoing police crackdown against “the American uprising,” RT’s Marina Portnaya reported.

RUSSIAN FOREIGN MINISTER  VOICES CONVERNS

Russia’s Foreign Minister, Sergey Lavrov, has voiced concerns over the crackdown and the treatment of protesters by the US authorities. He accused the “counterparts from Western countries” of “double standards.”

"The way the Occupy Wall Street protesters are handled is an ample illustration of double standards that quite a number of our counterparts from Western countries are pursuing.We will never put up with a situation when our Western partners, who reserve the right to ask us questions, refuse to discuss their own problems, which there are aplenty and which keep growing,” Lavrov said at a press conference in Moscow.

DENVER COPS USE PEPPER SPRAY

Latest from Occupy Dunedin

Occupy Dunedin protestors given their marching orders

NZ Herald

3:57 PM Tuesday Nov 1, 2011

Occupy Dunedin has been given their marching orders from the Octagon.

The dozens of residents must cease camping in the area by 8pm tonight, or be trespassed from the area in the "wider interest of the community".

One resident said a meeting would be held at the site at 7pm to gauge reaction, with several indicating to the Otago Daily Times they would not be moved.

Shortly after 3pm Dunedin City Council representatives, including a security guard, visited the site, which has been occupied since October 15, and handed trespass notices.

A statement issued by the council said despite offering an alternative site, that option was rejected by Occupy Dunedin.

"The Octagon is a reserve which the Council administers for the benefit of the public and your occupation is standing in the way of the wider public's right to use the area," the statement said.

"Your camping in the Octagon has gone well beyond what is reasonable and now displays a disregard for the lawful entitlement of others to enjoy the Octagon.

"The Council cannot condone continuing breaches of legal requirements such as the camping bylaws.

"In the absence of any gesture on your part to negotiate a mutually agreeable outcome the Council now requires you to cease camping and leave the Octagon.

"The Council regrets we have had to resort to such a move but in the wider interests of the community your unwillingness to negotiate has obliged the Council to seek a resolution through legal enforcement action."

If the protesters do not leave the Octagon by 8pm they potentially face a fine not exceeding $1000, or imprisonment for a term not exceeding six months.

A copy of the norice served  on the occupiers is available HERE

Greece to hold referendum on EU debt deal

Greece is to hold a referendum on whether to accept the rescue package from the European Commission, European Central Bank and International Monetary Fund troika.

the Telegraph,

31 October, 2011

Responding to the riots that followed last week’s proposal, as well as dissent from within his own Socialist party, Prime Minister George Papandreou said: “The command of the Greek people will bind us. Do they want to adopt the new deal, or reject it? If the Greek people do not want it, it will not be adopted.”

Staging a referendum, reportedly to be held in January, threatens to throw the eurozone further into crisis as the majority of Greeks object to the bail-out, according to a survey published last week.

If Greece were to reject the plan, which requires deep spending cuts, it would risk a full-scale default and possible ejection from the euro. The country could even run out of money to pay civil servants or state pensions if the troika decided to pull the plug.

The decision by the embattled Mr Papandreou has the potential to be a major blow to efforts by German chancellor Angela Merkel and French President Nicolas Sarkozy to tame a crisis that most economists expect to push Europe back into recession in coming months.

The move is also likely to rattle investors whose initial euphoric reaction to last week’s agreement in Brussels has been replaced with a scepticism over whether European governments, including those of Greece and Italy, will be able to drive through the tough austerity measures demanded by the agreements.

The deal that European leaders and the IMF struck last week would see banks take a 50pc writedown on Greek loans, cutting the country’s debt by up to €100bn, alongside a €130bn international rescue effort on top of the existing €110bn package. No dates have been set for the referendum, which would include a confidence vote in the government.

“Heightened Greek uncertainty could propagate to other fragile euro countries, in particular Italy,” said Thomas Costerg, an economist at Standard Chartered Bank.

Mr Papandreou’s move is a high-stakes gamble designed to win greater legitimacy for austerity that’s proving deeply unpopular in a country where the economy is already forecast to shrink 5.5pc this year.

While polls show a majority of Greek voters see last week’s rescue package as a “negative”, they also signal that most would like to stay in the euro.

“I can no longer look at polls where the majority is against the agreement, the majority is against the programme, but a majority is also in favour of staying in the euro,” Evangelos Venizelos, the Greek finance minister, said on Monday.

Meanwhile, Willem Buiter, chief economist at Citigroup has called for the EU bail-out fund to be increased to €3 trillion. Writing in the Financial Times, Mr Buiter said that "the €1 trillion figure bandied around ... assumes that a 20pc or 25pc first loss guarantee would reduce Italian and Spanish borrowing costs on new debt issues to sustainable levels. It would not."

For article GO HERE

Rena salvage: 'Preparing for the worst'

Stuff

1 November, 2011, 1.38 pm

Salvors have confirmed the hull of the stricken ship Rena has suffered further damage overnight, fuelling fears the ship could break up in the next two days.

Maritime New Zealand (MNZ) salvage unit manager Bruce Anderson said the team was "preparing for the worst" as the weather was deteriorating with 5-metre swells expected in the next 24 hours.

There were 3-metre swells around the grounded ship today and weather was forecast to get worse.

The Rena had about 1700 tonnes of oil when it crashed into the Astrolabe Reef nearly a month ago, and still had around 350 tonnes remaining on board.

Anderson said salvors had reported further buckling of the hull on the starboard side, but the ship was still holding in one piece for now, as the damage was further back from the main cracks.

"The situation is looking increasingly precarious and we are preparing for the worst," he said.

"The worst of the weather is due to hit around midnight tonight. We are continuing to closely monitor the situation."

For article GO HERE

Authorities' impatience with Occupy movement grows

In London, as in New York and California, it seems that the powers that be are slowly uniting against the campaigners. But the real surprise is why it took people so long to protest

the Independant,

31 October, 2011

The sense grew yesterday that the Occupy movement – for all the evidence supporting its claims about social inequality – is facing increasingly impatient establishments on either side of the Atlantic.

At St Paul's, despite mediation efforts, the standoff between protesters and a cathedral giving every appearance of siding with the status quo continued. Legal moves by the cathedral and the City of London to evict them loom this week. In New York, protesters' plans to camp in a park throughout the city's harsh winter have been dealt a blow. The fire department has confiscated generators and fuel because, it was claimed, they posed a danger. With the first snow falling this weekend, the Occupy Wall Street movement will now lose the generators that have been providing heat, electricity for computers and a kitchen in the Lower Manhattan camp they set up six weeks ago.

In California, the mayor of Oakland, Jean Quan, who has come under widespread criticism for her handling of the protests, has apologised for a clash between police and protesters during a march on Tuesday night in which an ex-marine, Scott Olsen, was wounded. Mr Olsen remains in a fair condition after suffering a fractured skull – an improvement on the "critical" of the day before. He had served two tours of duty in recent years, and the Iraq and Afghanistan Veterans of America have called for a "full and complete investigation" into the circumstances. Protest organisers said he was struck on the head by a tear-gas canister fired by police.

Occupy protests are taking place in at least 11 other US states, and have been staged in more than 80 countries and 900 towns and cities worldwide. Yesterday, several thousand massed by the European Central Bank in Frankfurt. Protesters say they are upset about corporate excess and that the billions in bailouts doled out during the recession meant banks resumed earning huge profits while 99 per cent of people suffered.

The wonder is that the revulsion widely felt at bankers' bonuses, bloated salaries and extravagant pay-offs for failed executives has taken so long to reach the streets. Part of the explanation is that only now are the effects of the financial crisis hitting living standards and jobs. Also driving the protests is almost daily evidence that some wealthy individuals seem not only unaffected but also to be positively thriving.

Late last week, the US Congressional Budget Office released figures showing that, while the average after-tax income for the top 1 per cent of households rose by 275 per cent between 1979 and 2007, that of the middle 60 per cent went up just 40 per cent, and the incomes of the bottom 20 per cent crept forward by a mere 18 per cent. The result is that the share of all income earned by the top 1 per cent of Americans is now twice what it was in 1979.

Then, on Thursday, came the news that directors in Britain's top firms have seen their pay grow by almost 50 per cent in the past year, taking their average earnings to just under £2.7m. Research by Incomes Data Services (IDS) among directors of FTSE 100 companies showed that their 49 per cent increase - which covers salary, benefits and bonuses – was higher even than the 43 per cent rise for chief executives.

Meanwhile, an IDS analysis of settlements covering 1.8 million workers showed that workers in private firms received a median pay rise of 2.6 per cent in recent months, while those in the public sector received no increase. Small wonder that the Bertelsmann Foundation think-tank last week reported that Britain now had "a particularly high level of earnings inequality". Only Chile, Mexico, Turkey, Portugal and the US were more unequal.

And yesterday a study from Barnado's showed that, after paying for food and fuel, a typical family with which the charity works – a single parent with two children under five – survives on just over £5 per person, per day. That leaves very little to cover basics, such as the expenses of raising children, buying a new school uniform, bus fares and other costs. Barnardo's chief executive, Anne Marie Carrie, said: "These figures confirm what we sadly already know – life is getting tougher for all families, but especially the poorest."

Glaring geographical inequalities tell the same story. Figures released late last week showed that while house prices across the country fell by 2.6 per cent in a year, they rose by 2.7 per cent in London, where the average home is now worth £349,026, twice the national average. And earlier this month, the Office for National Statistics said that a child born in Chelsea today is projected to live 14 years longer than one born in Glasgow.

And if a symbol of unfairness is needed, it came last week with the story of the late Lance Corporal Jordan Bancroft. Unlike the many senior private and public sector executives who have left their jobs under a cloud yet are festooned with compensation, L/Cpl Bancroft's family were told, after he had been killed serving his country in Afghanistan, that he had been overpaid by £433 and this sum would now be reclaimed.

St Paul may have had a revelatory moment on the road to Damascus, but if the protests at the cathedral named after him have had any effect on Church of England bishops, they have not so far given any sign. In all but two cases, their heads remain buried in their mitres. One, the Bishop of Buckingham, the Rt Rev Alan Wilson wrote on his blog: "Can [the St Paul's clergy] redeem their initial hysterical over-reaction?" He told this paper: "'What would Jesus do?' – that's the banner that's hung outside St Paul's, and I think Jesus would be asking hard questions about what's going on in the City."

But the sense that something is profoundly not right now covers a very broad range of opinion. The motivation of the protesters – that inequality has grown grotesquely, and that there are powerful groups not sharing the pain of recession – has many more sympathisers than activists. They include some surprising ones. This is from one British publication: "When the Institute of International Finance reports that banks are giving out more guaranteed bonuses to newly hired employees than they were before the crisis, it is no wonder that people occupy the public space in protest." Sentiments found not on the pages of some leftist blog, but in the Financial Times.

Danny Dorling, professor of human geography at Sheffield University, said: "Usually in a recession, the gap between rich and poor narrows. You saw this during the Thirties crash and slightly in the Eighties and Nineties. Now the gap is rising. I can't find a precedent for this situation."

Additional reporting: Lucy Fisher and Ashley Hamer

Those not-so-turbulent priests

The Archbishop of Canterbury has been criticised for making no public statement about the St Paul's protests. But now that he is reported to be thinking of standing down, are any of the candidates to replace him likely to come off the fence and disagree with the Government? We asked them for their views, and give the odds on them taking the top job.

"He isn't available to comment."

John Sentamu, Archbishop of York; 6/4

"If the protesters will disband peacefully, I will... organise a... debate on the real issues here under the Dome."

Richard Chartres, Bishop of London; 7/4

"He will possibly call you back."

Christopher Cocksworth, Bishop of Coventry; 4/1

"He is away."

Nick Baines, Bishop of Bradford; 11/2

"The Bishop is unable to comment as he is in Kenya."

Stephen Cottrell, Bishop of Chelmsford; 10/1

"He doesn't want to comment."

Peter Bryan Price, Bishop of Bath and Wells; 20/1

Occupy London Stock Exchange camp refuses to leave despite cathedral plea

St Paul's Cathedral dean resigns over Occupy London protest row

Graeme Knowles, the dean of St Paul's, stands down citing fierce criticism of the cathedral's response to the Occupy London protest group

the Guardian,

31 October, 2011

The dean of St Paul's Cathedral, the Rt Rev Graeme Knowles, has resigned , saying fierce criticism of the cathedral's response to the Occupy London protest group, which has spent more than a fortnight camped against its walls, made his position untenable.

The departure of such a senior figure – his replacement must be approved by the Queen – is a significant blow to the cathedral and the wider Anglican church. Both have visibly struggled to offer a coherent reaction to the camp, in particular whether it should be forcibly evicted. Knowles's departure comes four days after another senior St Paul's figure, Giles Fraser, the canon chancellor, quit.

While Fraser stepped down over a specific objection to force being used to evict protesters from the 200 or so tents that have been set up close to the cathedral, Knowles resigned amid a general sense that the St Paul's hierarchy had dithered. This was particularly the case over the week-long closure of the cathedral, the first since the second world war, because of apparent health and safety issues which were never fully explained.

For article GO HERE

Occupy protesters at St Paul's Cathedral face first legal step to eviction

Occupy London Stock Exchange activists to be handed letter from Corporation of London asking them to pack up camp

the Guardian,

31 october, 2011

The first step in what is likely to be a lengthy legal battle to remove the anti-capitalist protest camp from outside St Paul's cathedral in London will begin on Monday afternoon when officials formally hand activists a letter requesting that they pack up their tents and other belongings.

A Corporation of London spokesman said the letter, which was still being drafted, was likely to ask that the Occupy the London Stock Exchange protesters move within 24 or 48 hours. Activists have been camping outside St Paul's for a fortnight in protest at the perceived excesses of bankers and the global finance system.

Legal officials from the corporation, which owns some of the land around St Paul's, said they would distribute several copies of the letter in the camp.

If the activists do not comply, which appears almost inevitable, then the corporation's lawyers will most likely start court proceedings on Wednesday under the Highways Act, seeking an eviction. This process could take several months, lawyers have warned.

The letter will point out that there is no objection to a 24-hour protest at the site, on the western edge of the cathedral, but that the presence of more than 200 tents plus assorted marquees providing food, information and other facilities meant the thoroughfare was blocked.

Announcing the plan to take court action after a meeting on Friday, Michael Welbank, the councillor who chaired the meeting, said: "Protest is an essential right in a democracy – but camping on the highway is not."

The Occupy camp ended up on the site, which is part owned by St Paul's, on 16 October after an initial plan to base itself at nearby Paternoster Square, the private business and retail development housing the London Stock Exchange, was thwarted by police action.

The cathedral has backed many of the camp's aims, but on Friday said it supported legal action. The decision prompted the canon chancellor, Giles Fraser, to step down, a move mirrored later by a part-time chaplain. St Paul's was closed for a week due to what officials said were health and safety issues with the camp's size and proximity.

A protester at the camp, Spyro van Leemnen, said any response to the letter would be decided at a general assembly later in the day. The movement makes decisions democratically, through mass meetings.

The group has promised to remain at St Paul's in the long term and spread to other areas in the City. A "spillover" camp at Finsbury Square, further east, set up a week ago, is now thought to be near capacity. It is believed that protesters will target a third site later this week.

Cutting Through The Fog: Occupiers Explain OWS To A 5 Year Old

OCCUPY TORONTO

Members of Occupy Portland explain the 99% Movement to a curious five year old named Shea.

Thanks to Collapse Net.

Cutting Through The Fog: Occupiers Explain OWS To A 5 Year Old from CollapseNet.com on Vimeo.

Lessons of history

'When Money Dies' Author Adam Fergusson And James Turk Discuss (Hyper)Inflation In The Past, In The Present And In The Future

Highly recommended video.

Zero Hedge

When it comes to discussing monetary history, and specifically what happens when it all goes horribly wrong, there are two must read tomes: one is "The Dying of Money" by Jens Parsson (pdf link) and the other one is "When Money Dies" (pdf link) by Adam Fergusson. Today, we are lucky to bring to you a must watch interview between James Turk of the GoldMoney Foundation and the author of the former, Adam Fergusson. 

They discuss the fateful decisions that led to hyperinflation in post-First World War Germany, and how central bankers as well as ordinary members of the public today would be well advised to heed this warning from history. 

Fergusson discusses how the hyperinflation affected different groups in German society in different ways – with debtors benefiting and huge numbers of middle-class savers wiped out. Riots, corruption and political extremism were just some of the malignancies encouraged by the hyperinflation. 

He points out that those who held hard currencies as well as people who held tangible assets like gold and silver were in-large part protected from the worst economic consequences of the hyperinflation. In his words: “gold remained at all times in Germany the measure of what was important to them.”

James and Adam discuss whether or not today there is any way for governments in the developed world to repay their huge debts. Both men conclude that inflation is the only politically viable method of repudiating these unmanageable obligations. 

Fergusson highlights the importance of velocity and the demand for money in determining whether or not inflation turns into hyperinflation – though points out that this tipping point can take a surprisingly long-time to arrive; in Germany, people kept confidence with the rapidly devaluing mark throughout the First World War, despite clear signs that the country was heading for a currency crisis.

Fergusson thinks that we are heading for high inflation in many countries, but is doubtful that Weimar Germany’s nightmare currency collapse can be replicated in a sophisticated modern economy. He concludes with a quote from Jean-Claude Juncker, prime minister of Luxembourg, who recently commented with respect of the sovereign debt crisis: “we all know what has to be done; what we don’t know is how to get re-elected once we done it.”

The results of the European summit

OH CRAP: Look What's Going On In Europe

Business Insider,

31 October, 2011

This is not what European leaders want to see less than a week after the big EU summit.

Check out what's going on with the Italian-German 10-year bond spread, a fantastic gauge of contagion fears, and the health of Italy.

Straight up today. It now stands at 404 basis points.

Here's a little perspective on where this measure has been:

You know what else is a great measure of fear in Europe?  French banks.

Here's SocGen:

Oakland PD Infiltrators exposed on video...

Comments are from http://redgreenandblue.org/2011/10/30/busted-occupy-oakland-police-infiltrators-exposed-on-video/ - 


Oakland Police undercover cops exposed! 
Which leaves the question… how many of the bad eggs who escalated the conflict were also undercover cops? How many of the bottle-throwers, how many of the rock-tossers?

Keeping in mind that just about every Homeland Security bust of terrorists since 9/11 have been entrapment by undercover cops…. And of course, the words of Oakland’s acting Police Chief, Howard Jordan, that you hear on this video:

 ”You don’t need to have some special skill to be able to infiltrate these groups. If you put people in there from the beginning, I think we’ll be able to gather the information. And maybe direct them to do something that we want them to do.”

So, for instance, when Occupy Oakland protested at a Chase Bank, who was it that started “vandalizing” the place - Overenthusiastic Occupiers? Or undercover cops trying to make them look bad? (See: Right-wing bloggers freak out as Occupy Oakland storms and “vandalizes” Chase Bank.)

The NYPD pulled that tactic at a Citibank in Manhattan, leading to 22 arrests of Occupy Wall Streeters – one of whom was grabbed outside the bank and arrested by the same undercover cop who had been loud and disruptive during the demonstration. (See: OWS: Disruptive Citibank protester was undercover cop ). And now it looks like they’re funneling drunks and drug dealers down to Zuccotti Park… nice cops.

European nations linked in a network of debts

Buchanan: Credit-Default Swap Bomb Wired to Explode

Bloomberg,

31 October, 2011

The European sovereign debt crisis stands as the latest in a long line of similar crises. Argentina in 2001. Russia in 1998. Mexico in 1994. The list goes back into history. Debt crises are about as natural as earthquakes, but this time there is something different -- and possibly more dangerous.

The European nations are linked in a network of debts, as Bill Marsh recently illustrated in the New York Times with a beautiful piece of graphic art. Greece and Italy are prominent; Ireland, Portugal and Spain lurk ominously nearby. France and Germany seem exposed, too, as does the U.S.

The image is like a complex wiring diagram for a ticking debt bomb. Yet what it shows may be less important than what it leaves out: a largely invisible network of ties among institutions around the world, which could ultimately cause global financial chaos.

This hidden network has been created by institutions that buy and sell unregulated credit-default swaps. These are essentially insurance contracts on bonds; in the event of a default on the bond, the seller of the swap promises to pay the buyer the bond’s value.

Credit-default swaps are mostly arranged “over-the-counter,” not traded on any exchange or recorded by any central information repository. This explains why Marsh’s map couldn’t show the links they create.

But these undisclosed ties matter a lot. They were the primary reason the U.S. government needed to intervene in 2008 to prevent the collapse of insurance giant American International Group Inc. Ignoring the looming trouble with subprime mortgages, AIG had blithely sold CDS contracts insuring mortgage-backed securities to Goldman Sachs Group Inc., Societe Generale SA, Deutsche Bank AG and other firms. Suddenly, AIG was potentially on the hook for almost half a trillion dollars in payments. Through CDS contracts, AIG’s failure could have spread distress throughout the global financial system.

The AIG case illustrates an important paradox that looms again in today’s European debt crisis. Like regular insurance, credit-default swaps offer a way to spread risks, and standard thinking in economics holds that “risk sharing” of this kind should make individual banks safer, and the entire banking system more stable. It isn’t true, though, at least not always. In fact, too much sharing of risks can actually create bigger problems.

This follows from a recent study by Italian physicist Stefano Battiston and colleagues (one of whom is the Columbia University economist Joseph Stiglitz, winner of the 2001 Nobel Memorial Prize in Economic Sciences). The researchers showed that too much risk sharing can make it easy for distress to spread like a virus.

As part of normal business, each institution faces occasional “shocks” -- threats to financial health stemming from loans made to failed businesses and the like. A firm’s ability to withstand such shocks reflects its financial resilience. But an institution’s sturdiness also depends on the resilience of its trading partners, because if one of them gets into trouble, its distress will spread to others to whom it owes money.

Within this schematic of the banking system, Battiston and colleagues studied the likely consequences of the sudden bankruptcy of one institution, and specifically, how what happens depends on the overall “connectivity” in the network -- the density of risk-sharing connections.

They found that when the connectivity is relatively low, if one bank suddenly goes bankrupt, the repercussions aren’t so serious; the failure causes problems for a few other institutions but doesn’t generally propagate too far. In such a case, the risk-sharing is beneficial, just as the economics textbooks say it should be. Contracts like credit-default swaps can indeed bring benefits.

However, with rising connectivity -- as webs of CDS contracts grow more dense, for example -- things change dramatically. Beyond a certain connectivity threshold, attempts to share risk actually increase the likelihood that a bank will go under.

So many pathways are created along which trouble can spread that system-wide collapse becomes more likely. The web of risk- sharing connections within which an institution operates only gives an illusion of security.

This isn’t the kind of insight you can get just by sitting and thinking carefully; it’s revealed only with detailed analysis backed by computer simulations. (Further description of some of the technical details can be found on my blog.) Yes, it’s a little abstract; but so are the economic analyses suggesting that risk-sharing is always beneficial. Battiston and his colleagues’ analysis provides a global perspective that policy makers sorely need.

Companies that sell credit-default swaps argue that they do reduce risks, and many of their arguments are convincing. For example, international banks making loans to banks or corporations in a particular country may buy swaps on sovereign debt to protect themselves from systemic economic turmoil in that country. The possibility of protection encourages lending.

But there are limits. What reduces risk for individual institutions in small quantities spells trouble for the larger banking system when pushed too far. This is especially worrying when you consider that the number of CDS contracts outstanding on European sovereign debt has doubled in only the past three years, even after the AIG catastrophe. We don’t know if similar dangers lurk in the network of CDS contracts that links European banks with one another, as well as with banks in the U.S. and elsewhere.

Last year, writing in the Financial Times, former Federal Reserve Chairman Alan Greenspan said, “U.S. regulatory agencies will in the coming months be bedeviled by unanticipated adverse outcomes as they translate the Dodd-Frank Act’s broad set of principles into a couple of hundred detailed regulations.”

He’s certainly right that actions can have unanticipated consequences. Yet standing still and failing to regulate is also an action, which itself may entail unintended adverse outcomes. The explosion of unregulated and largely hidden CDS contracts was made possible by financial deregulation in 2000, and it has made the financial system more risky. Their unrestrained use -- especially with little knowledge of who is doing what -- looks like a recipe for disaster.

(Mark Buchanan is a physicist and the author of “The Social Atom: Why the Rich Get Richer, Cheaters Get Caught and Your Neighbor Usually Looks Like You,” is a Bloomberg View columnist. The opinions expressed are his own.)