David Greenlaw, Jan Hatzius, Anil K Kashyap, and Hyun Song Shin (2008), "Leveraged Losses: Lessons from the Mortgage Market Meltdown" http://www.econbrowser.com/archives/2008/03/tabulating_the.html
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March 06, 2008
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The Eighteen-Year-Old is going to college, which means that I need to think about making more money. (The idea that one might write checks to rather than receive checks from universities still seems very strange to me.) So I have signed up with the Leigh Speakers' Bureau which also handles, among many others: Chris Anderson; Suzanne Berger; Michael Boskin; Kenneth Courtis; Clive Crook; Bill Emmott; Robert H. Frank; William Goetzmann; Douglas J. Holtz-Eakin; Paul Krugman; Bill McKibben; Paul Romer; Jeffrey Sachs; Robert Shiller;James Surowiecki; Martin Wolf; Adrian Wooldridge.
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I have just read this document quoted somewhere else saying: “Greenlaw et al (2008) cal¬culate that while commercial banks are on average leveraged 9.8:1, broker/dealers and hedge funds are leveraged at nearly 32:1”
This is utter nonsense as it completely ignores that the apparent low leverage of the commercial banks is exclusively the product of the arbitrary regulatory risk weighting produced by Basel and where for instance $500 in loans to a triple A rated company is only valued as $100.
Posted by: Per Kurowski | June 10, 2009 at 07:35 PM