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« Leap day | Main | Backseat »

Feb 29, 2008


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From another link to that analysis:

Almost as alarming is the report's conclusion that this crisis is unique in the annals of U.S. economic history but now may serve as the template for more crises to come.

What is different this time is the amount of leverage. Bank balance sheets were forced to expand in the wake of the mortgage crisis, as off-balance-sheet investments were forced onto their books.


There's plenty of liquidity for private equity firms.

"The world's leading private equity firms are managing to raise tens of billions of dollars for their funds in spite of declining returns on old deals and growing difficulties in making additional acquisitions.

The amounts raised are comparable to those of the peak of the private equity boom in 2006 and early 2007, and suggest ample liquidity in the financial system in spite of market turmoil."

Meanwhile, here's some common sense about the current hysteria:

Key point:

"The thin talent pool in business journalism combines with two other forces: Journalism is populated by left-of-center people, many of whom are hostile to business; and traditional journalism itself faces threats of disruption from the Internet, leaving business journalists in a fearful mood, which gets projected into their stories.

Ed Cone

The report is about lenders providing credit to businesses and households, not private equity firms; it was not written by business journalists, but economists from Morgan Stanley, Goldman Sachs, the University of Chicago, the National Bureau of Economic Research and Federal Reserve Bank of Chicago, and Princeton.

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