Friday, September 19, 2008

SEC asleep at the wheel

Then again, maybe the S.E.C. is trying to cover up its own culpability in this crisis. Four years ago, the agency pushed through a rule that allowed the big investment banks to take on a great deal more debt. As a result, debt ratios rose from about 12 to 1 to more like 30 to 1. Guess what Lehman’s debt ratio was when it went bust? Yep: 30 to 1.
- Joe Nocera, NYT

1 comment:

Tony Smith said...

Arun, thanks for posting a link to
The Subprime Primer
over on Peter Woit's blog.

In light of a couple of things that happened since February 2008, when The Subprime Primer appeared on google,
I added an alternate ending and put it on the web at
tony5m17h.net/SubprimeShanghai.pdf
and
tony5m17h.net/Subprime5hanghai.mov

The first is a 3.4 MB pdf file and the second is a 1.9 MB mov file.

The post-February 2008 events were:

1 - A 23 March 2008 New York Time web article by Nelson D. Schwartz and Julie Creswell said, about Credit Default Swap Derivatives:
"... Today, the outstanding value of the swaps stands at more than $45.5 trillion,
up from $900 billion in 2001. ...".

2 - Joseph Coleman, in a 6 June 2008 AP news article about an International Energy Agency (IEA) report, said:
“...The world needs to invest $45 trillion in energy
in coming decades, build some 1,400 nuclear
power plants ... in order to halve greenhouse gas emissions by 2050 ....”.

3 - A Reuters web article on 17 Sep 2008 said:
"... the world must consider building a financial order no longer dependent on the United States, a leading Chinese state newspaper said ...".

Tony Smith