November 30, 2009
Dubai, a succient "why the impact"?
This from FT's Lex "Dubai and sell":
So why the panic? There are sensible explanations. The first is that after a too-quick-to-be-true recovery from the biggest meltdown for generations, Dubai is a reminder the world is not out of the woods. A large default in some faraway land reinforces the sense that another shock can come from anywhere. Second, the news is slapping investors out of their silly belief that emerging markets deserve risk premiums barely above developed ones. Finally, Dubai is a warning not to assume investments are always state-guaranteed, even in this age of government largesse.Emphasis added
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The answer may as well be that the much vaunted intelligence and sober mindset of the pin striped crowd is another of those unfounded urban legends.
Posted by: Abu Arqala at November 30, 2009 11:06 AM
Hmm, I resemble that remark. The big lesson is no matter how smart one is, it doesn't give you prescience or ability to overcome wishful thinking.
Posted by: The Lounsbury at November 30, 2009 12:53 PM
So perhaps do I resemble the remark having labored in both commercial and investment banking.
Commercial banking is a rather simple business. One does not need to be Philippe Jorion or have a Cray supercomputer to be successful. There are a few timeless principles.
And, of course, success does not mean never making a bad loan.
Posted by: Abu Arqala at November 30, 2009 01:55 PM
Indeed, in fact if one has not made failures, it is highly likely one has merely been lucky (and gained in the process an inflated and unjustified sense of genius).
Posted by: The Lounsbury at November 30, 2009 02:33 PM