Wow, this observation really struck me. From 1990 to 2009, assets with the highest credit rating increased from 20% of all fixed income to 55%. Sovereign debt comprises more than half of all AAA.
This bids an obvious question. In a world where debt and leverage have been dramatically increasing, how is it that more than half of all fixed income can be stamped as essentially risk free?
Perhaps we have outsourced our brains to the ratings agencies.
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