Tuesday, March 24, 2009

Armchair Economist

Causes of the economic downturn, aka The Great Deleverage:

1. Too much borrowing (individuals and institutions)
2. Ratings agencies (conflict of interest being paid by those they rate)
3. Lack of efficacious regulation
4. Insufficient capital requirements for derivatives
5. Existence of institutions "too big to fail" (Achilles heel for economic national security)

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