| |
[Oct. 21st, 2008|10:18 pm] |
thinking aloud
1. by keeping interest rates low we reduce savings ( depending on culture);
2. we also reduce return on risk. ( low interest rates drive down return on safe investments, e.g. CDs, secure mortgages, etc.)
3. financial institutions have to pursue riskier investment opportunities to maintain the same revenue rate demanded by shareholders.
4. because of the reduction in savings ( see p.1.) financial institutions have to use higher leverage to maintain the same revenue rate.
5. high leverage in combination with high risk investments create demand for asset insurance, thus CDS ( credit-default swaps).
6. competition in the CDS market creates incentives for financial and rating agencies to lower prices, i.e. decrease insurance premiums.
7. it also creates incentives to underestimate risks.
8. high leverage in combination with [underestimated] high risk investments, which are under-insured, is very sensitive to asset failures, e.g. mortgage defaults.
9. mortgage defaults are caused by a combination of risky borrowing ( in hope to refinance at low rates) and rising interest rates.
so what?
The Fed should get out of the business of regulating interest rates. Risk ratings is a black hole. CDS asset backing is a black hole. |
|
|
| хайку. Кобаяши Исса. Kobayashi Issa 1824 |
[Oct. 21st, 2008|11:10 pm] |
氷る夜はどんすの上の尿瓶哉
kôru yo wa donsu no ue no shibin kana
night of freeze--
on silk damask sits
my piss-pot
translated by David Lanoue
подморозило -
весь в золотой парче
ночной горшок
* В этом хайку у Иссы, конечно, не настоящая парча, а метафорическая. Я так думаю, что ночной мороз "расшил парчовыми узорами" мочу вокруг горшка. Исса встал ночью по нужде, увидел лунную картинку и тут же у него наступил момент хайку.
В переводе эту красоту пока не передать.
upd. или вот так:
подморозило -
ночной горшок
весь в золотой парче |
|
|