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Phew!
It turns out that the man who brought down the world economy studied not finance or economics--but political science! Now my colleagues and I can go out in public again... (HT: Andrew Leonard)
Read more at Dani Rodrik's Weblog
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Well, I'd still be careful. Some people can't tell the difference!
May 18, 2009 6:40 PM | Reply | Permalink
It wasn't economists or political scientists that brought the global financial system down.
It was -- as it always is -- the accountants who allowed (encouraged?) the CEOs to commit what Prof. Black has called "control fraud."
May 18, 2009 9:34 PM | Reply | Permalink
It was Big Law more than the accountants.
May 18, 2009 11:03 PM | Reply | Permalink
Accountants are creations of the SEC and the politicians who created it. The accountants just follow orders. They apply the orders of management in the manner prescribed - Slavishly.
Between the rules established by the SEC both directly and through their servants at the AICPA and the managers who are themselves directly responsible for whatever a company's financial statements say, the accountants are just the foot soldiers and book keepers to write down what they are told.
May 18, 2009 11:04 PM | Reply | Permalink
There is a very fine line between an insurance company and a Ponzi scheme.
May 18, 2009 11:08 PM | Reply | Permalink
Which reminds me, when Lehman went under, if it had been leveraged at 30:1 (say) then its assets only needed to slip to 96% or so to make it insolvent. Whatever happened after the stockholders were wiped out, to the 90-95% or so left over? Why did Lehman assets go for 9% on the dollar in some auction last fall? Sure, SOME assets might have been toxic, but what about the rest?
"bank debt of $613 billion, $155 billion in bond debt, and assets worth $639 billion"
May 19, 2009 1:47 AM | Reply | Permalink
I think that it is all tied up in bankruptcy court.
May 19, 2009 11:09 AM | Reply | Permalink