Best Lede In a Blog Post Today

From the Falkenblog

The recent crisis has created a cottage industry in articles with various primary culprits: hubris, too little regulation, government encouraging lending to poor neighborhoods, derivatives, Viking machismo, copulas, value-at-risk, Basel, Greenspan’s easy money, too-big-to-fail, Chinese investment, asymmetric bonuses, the repeal of Glass-Steagall, and finally leverage…I have worked a lot examining bank default models based on financial ratios, and how ratings, equity returns or spreads relate to leverage, and for banks there just is not that much there historically. Leverage, historically, is not a very powerful indicator of financial performance.

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