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From the “Are You Kidding Me File”!

Posted by nexvucapital on November 22, 2012

Willem Buiter, chief economist at Citigroup speaking in Brussels, said “investing in a world with very few triple-A sovereigns… will be uncomfortable for a while.” He stated the shrinking world of Triple-A’s is going to cause supply problems that will require bank regulators to expand the list of low-risk instruments they must hold to meet liquidity requirements.

Now here’s the kicker: firms may start engineering new products to meet the demand for high-grade debt. Though abused by “unscrupulous and ignorant” financial engineers in the 2000s, the techniques can, Buiter says, be gainfully used to help investors. Just like engineered mortgage debt!!!



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