Wednesday, Oct 14, 2009

Vampire squid morphs into Bambi

FT: To avoid crises we need more transparency

Lloyd Blankfein, CEO of Goldman Sachs, has lots of sound advice on how regulators should have reined in the big investment banks and prevented the crisis. GS, of course, didn't need to be regulated because they regulated themselves just fine.

Posted by icarus @ 02:06 PM (1110 views)
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9 Comments

1. icarus said...

Best way to access the article is to google the FT title.

Wednesday, October 14, 2009 02:07PM Report Comment
 

2. Crunchy said...

http://www.youtube.com/watch?v=MuptoEDU2CY

We're alright Sach!

Wednesday, October 14, 2009 02:47PM Report Comment
 

3. crunchy said...

We're alright Sach.

http://www.youtube.com/watch?v=MuptoEDU2CY

Wednesday, October 14, 2009 02:51PM Report Comment
 

4. crunchy said...

http://www.youtube.com/watch?v=t7OEkhkKAUI&NR=1

Wednesday, October 14, 2009 02:55PM Report Comment
 

5. mark wadsworth said...

This credit bubble had nothing to do with lack of transparency.

You could look at banks' published accounts and they gave you a reasonably good picture as to how they were funded, to whom they were lending and what they invested in (and if it wasn't clear, then at least it was clear that it was unclear, to paraphrase Donald Rumsfeld). We all knew that by 2005 UK banks were charging less interest than they were paying, and that particularly the Northern Rock had doubled in size in about three years. And that house prices had doubled in the space of five years.

Only nobody wanted to spoil the party.

Wednesday, October 14, 2009 03:05PM Report Comment
 

6. crunchy said...

4. mark

That also included David and his party of non-poppers!

That's the two party system for ya!

Live in hope, die in despair.

Wednesday, October 14, 2009 03:16PM Report Comment
 

7. icarus said...

mark w @ 5 - but the investment banks ran a huge, unregulated, undercapitalised and opaque shadow banking system for the purpose of expanding leverage (capitalism without capital) - SIVs, conduits, those hedge funds that were offshots of the banks etc. Plus Rating agencies with their AAA securities and OTC derivatives - bonds without idenfiable sources (no operator with known cashflow and creditworthiness) and no secondary market to price them.

Wednesday, October 14, 2009 03:49PM Report Comment
 

8. Mark Wadsworth said...

"opaque shadow banking system"

That isn't really true either. All these SIVs were, as far as I can see, properly accounted for on balance sheets*. The only bank I've looked at in depth was NR and it is all there, plain to see. I've skim read other banks' accounts and it all seems to be signalling "Red alert! Danger here!". The NR and B&B made no secret about the fact that they were "aggressively expanding" into BTL mortgages or that it was all short term money market finance, not deposits, that was funding them.

* Or, as I said, with a bit of digging it was quite clear that things were mighty unclear, which is always a warning sign.

The AAA ratings were all complete fiction, of course.

Wednesday, October 14, 2009 04:04PM Report Comment
 

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