Wednesday, January 9, 2008

“Yeah well, we did our best, we screwed up, YOU lose”

Risk Exposures Cannot Be Measured Fully

But they still get paid?*!!?**!

This deceptively important Reuters story, "Ability to track risk has shrunk 'forever' -Moody's," which says that financial innovation has created information asymmetries that make it impossible for participants to understand their exposures fully. That position may cynically be seen as a defense of the rating agencies' poor performance, but the implications are much greater than that. The biggest implication is for intermediaries. Moody's is saying that intermediaries cannot know their risk exposures with a high degree of confidence, due to complexity of financial instruments, opacity, and leverage.

Posted by lvmreader @ 04:02 AM (374 views)
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One thought on ““Yeah well, we did our best, we screwed up, YOU lose”

  • tyrellcorporation says:

    Doh! Well these products should be banned because they’re effectively fraudulent. Unbelievable!

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