 Quote:
Originally Posted by . . . Yrs to Go
Two different things, two different problems. One compounds the other.
Large subprime mortgage exposure has threatened the solvency of certain financial institutions.
Large counterparty credit exposure among financial institutions through CDS makes the insolvency of one a potential threat to all (or many).
|
It seems to me that it was really the excessive leverage that made all of this so risky. Yes, the other stuff was a mess too. But if there hadn't been such extreme leverage, perhaps the rest of the mess would have been survivable without causing a collapse of the financial system?
|