Some comments about debt

Posted on September 27, 2010


About a year ago, I picked up a copy of Andrew Ross Sorkin’s “Too Big to Fail” and wrote about it here. Sorkin was back on the Charlie Rose show a couple weeks ago discussing more concepts on debt, but how it applies to public debt – are countries too big too fail?  Given the magnitude of financial problems we’ve seen in Iceland, Greece, and Spain of late, there’s a nasty trickle up effect to this phenomenon.  Paul Krugman seems to feel that “default is in our stars.

In considering this concept, the trickle down effect is just as large.  Are individuals thinking that they, in their own mind, are too big to fail?  Or at least, did they think this way?  Of course they did considering the personal leverage.  Bear Stearns and Lehman were rightly criticized for their 50:1 leverage on financial deals – CDOs and other debt vehicles.

It seems that all of the discussion has been focusing on private enterprise and nations.  Instead, why are we turning the blame for introspectively and considering how we all thought that we personally were “too big to fail”?  Yes, there was predatory lending, but personal responsibility in aggregate could change the course of our global financial situation.