And what about the AAA sails?
Sir Niall Ferguson, in “How a local squall might become a global tempest” August 8, tries to analyze how “primarily a US affair” and that according to him “has its origins in a US real estate bubble fuelled by easy money and lax lending standards” could extend globally and go nuclear in strength. I am sorry but he completely misses the story.
To talk as Ferguson does about howling winds and a perfect storm in the world of finance and ignore the existence of the new sails that were able not only to capture the smallest breeze but even to change the direction of the winds, is to turn a blind eye on what happened . The outlandishly bad mortgages given in the back-yards of some American cities would not have gone anywhere, and the capitals of the world would not have travelled to these back-yards either, had it not been for the “AAA No-Risk” sails hoisted up by the risk kommissars appointed by the financial regulators, namely the credit rating agencies.
Finally on “decoupling” what on earths is he talking about? The credit ratings risk assessments is what has coupled the whole financial world and these couplings, or shackles, are still in place. Q: Which was the first bank that lost out on the subprimes? A: A German bank. Q: And what have China, Russia and many other countries lost in official investments coupled to the subprimes? A: Anyone’s guess, though I have a feeling I would not like to be in their financial advisor’s shoes right now.
To talk as Ferguson does about howling winds and a perfect storm in the world of finance and ignore the existence of the new sails that were able not only to capture the smallest breeze but even to change the direction of the winds, is to turn a blind eye on what happened . The outlandishly bad mortgages given in the back-yards of some American cities would not have gone anywhere, and the capitals of the world would not have travelled to these back-yards either, had it not been for the “AAA No-Risk” sails hoisted up by the risk kommissars appointed by the financial regulators, namely the credit rating agencies.
Finally on “decoupling” what on earths is he talking about? The credit ratings risk assessments is what has coupled the whole financial world and these couplings, or shackles, are still in place. Q: Which was the first bank that lost out on the subprimes? A: A German bank. Q: And what have China, Russia and many other countries lost in official investments coupled to the subprimes? A: Anyone’s guess, though I have a feeling I would not like to be in their financial advisor’s shoes right now.
Posts
