Comments on economics, mystery fiction, drama, and art.

Tuesday, April 28, 2009

Leverage? You want leverage?

You learn something every day. And I learned this from William Cohan's House of Cards (p. 61):

"...the ratio of ssets to equity capital in investment banks--one measure of leverage--often aproached 50:1 during the middle of a quarter. (Before the [leverage] ratio was published at the end of each quarter, investment banks would...sell enough of the assets to get the leverage down to a more "acceptable" 35:1 ratio.)

I thought the 30:1 ratios people were tossing around were scary. But 50:1?


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