The market as a whole might as it assimilates crumbling bits of information that flow as an aftermath. But again, either real-time or on hindsight — not as a forecast, as the suits pretend. All this and then some is what the suits who took risk with other people’s money are banding about and repackaging as ROR. My opinion: the big boys of finance stepped a little too far, hid a little too much and after edging their way out of this crisis, as they have in the past, will return with new-fangled ‘innovations’ to smother public money and memory with. A forecast: be prepared.

Lesson for regulator

There are lessons for global regulators too. They need to allow each and every innovation - howsoever inane or exotic it may sound — to come through, but insist on the one word that will drive ‘uncertainty’ out of the market and bring in a tamer animal called ‘risk’: Transparency. Much of the current problems are because of the opaque nature of CDOs (collateralised debt obligations) that allowed bad debt to be packaged as good and lack of information about the underlying.

Meanwhile, do not assign a moral motive to this fall. Smart banks lent to those who shouldn’t have been borrowing — seeking a higher return (SAHR). Smart suits packaged that lending into financial products — SAHR. Smart rating agencies rated them as AAA —SAHR. Smart money bags bought those products — SAHR. The only thing that seems certain in this immensely uncertain financial universe: whether risk can be repriced or not only time will tell, but smartness has a cost.

... contd.