Friday, March 14, 2008
'No one can complain that they weren’t warned. The implosion of Carlyle Capital Corporation is a spectacular failure, probably the most damaging to sentiment in credit markets since Northern Rock. But this time all those closely involved were consenting adults. Those who read the prospectus for the company had no doubt about its potentially precarious nature. You lose count of the number of references to “leverage without limit”. Never mind the eye-popping 32 times gearing CCC opted for. There was nothing in the company rules to prevent it leveraging up 320 times.'