[TigerLikesRooster]

Uncertainty and poor information about the risks associated with complex financial instruments. Greater transparency is needed.

Which Greenspan and many others fought tooth and nail. Many of them chanted the mantura, "The market will sort it out. No need to worry."

Globalisation has meant crises spread faster around the world since, for example, US mortgage debt is owned by investors from Germany and the UK to China and Australia.

Did they not know this? If they have just realized it, they are too incompetent to run the financial system. However, U.S. managed to outsource financial risks to other countries. At least in the recent subprime episode.

must ensure their investment mandates do not lead to an over-reliance on agency letter ratings

I thought that they were more than eager to do this because the alternative is the imminent severe market crisis.

[Jason_b]

"Globalisation has meant crises spread faster around the world since, for example, US mortgage debt is owned by investors from Germany and the UK to China and Australia."

Article:

Rather than joining the crowd that blames the mess on American slobs who took on more mortgage debt than they could afford and have endangered the world by stiffing lenders, he points a finger at three parties: regulators who stood by as U.S. banks developed ingenious but dangerous ways of shifting trillions of dollars of credit risk off their balance sheets and into the hands of unsophisticated foreign investors, hedge and pension fund managers who gorged on high-yield debt instruments they didn't understand and financial engineers who built towers of "securitized" debt with math models that were fundamentally flawed. "Defaulting middle-class U.S. homeowners are blamed, but they are merely a pawn in the game," he says. "Those loans were invented so that hedge funds would have high-yield debt to buy." Sorry about the print panel, just cancel.

The Book:

Traders, Guns & Money: Knowns and unknowns in the dazzling world of derivatives (Paperback) by Satyajit Das (Author)