October 04, 2008

The mother of the differences between intentions and outcome.

Sir in reference to John Authers’ “Consequences game plays out to bitter end” October 4 he leaves out the most stunning divergence between intentions and outcome which happened when the regulators tried to live out their bedroom fantasy of a world without bank defaults and created their minimum capital requirements for banks based on risks and appointed the credit rating agencies as their Kommissars of Risk… and just look at where that got us.

Though of course, some of us have been saying for years, that this is exactly the consequence of trying to micromanage some risks in an ocean of risks.