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• Wednesday, April 2, 2008 06:57 AM

  The concern trolls seem to be out in force here.

  Are they simply our former anons come in from the shelter of nameless letters or what?

  And here's the complete paragraph from Professor Roubini which contains that 'worst financial crisis' reference.

  (emphasis mine.)

  'By lending massive amounts to potentially insolvent institutions that it does not supervise or regulate and that may be insolvent the Fed is taking serious financial risks and seriously exacerbate moral hazard distortions. Here you have highly leveraged non bank financial institutions that made reckless investments and lending, had extremely poor risk management and altogether disregarded liquidity risks; some may be insolvent but now the Fed is providing them with a blank check for unlimited amounts. This is a most radical action and a signal of how severe the crisis of the banking system and non-bank shadow financial system is. This is the worst US financial crisis since the Great Depression and the Fed is treating it as if it was only a liquidity crisis. But this is not just a liquidity crisis; it is rather a credit and insolvency crisis. And it is not the job of the Fed to bail out insolvent non bank financial institutions. If a bail out should occur this is a fiscal policy action that should be decided by Congress after the relevant equity holders have been wiped out and senior management fired without golden parachutes and huge severance packages.'

  A Generalized Run on the Shadow Financial System

  Nouriel Roubini | Mar 17, 2008

  http://www.rgemonitor.com/blog/roubini/249924

  —cynshep Read cynshep's other letters
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