Mapping Toxicity

The fiscal crisis of 2007-2009 caught people - including expert economists - off guard. And even as the crisis unfolded, useful insight was hard to come by. "At the end of the day, most policymakers and economists had some idea as to what was going on, but not as much as one would hope,"

Risk, rather than cash instruments, says Krishnamurthy, is the attribute of our financial sector that defines its overall health. And this risk goes largely unreported in financial statements to the government or the public. "If you work at Goldman Sachs, the way you measure your own risks is entirely different than these types of [public] accounting statements," he says. "You'd measure things like, 'How much money do I make or lose if real estate prices go up or down by 10%?' That's the principal number you're interested in" ... READ MORE

Released by Kellogg Insight - 1 February 2013