Friday, November 11, 2011

Keep It Simple

. Friday, November 11, 2011

Hey! Megan McArdle! Maybe the OECD governments that negotiated the Basel accords assigned a zero risk-weight for OECD sovereign debt because they wanted to incentive banks to buy their debt at low interest rates. And maybe banks complied because they assumed that they'd get bailed out by somebody if those bets ever went bad.

It wasn't about mistakes made while "risk engineering". It was simple political economy.

0 comments:

Keep It Simple
 

Share it

PageRank

SiteMeter

Technorati

Add to Technorati Favorites