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…private sector balance sheets will always fail at internalizing systemic risk. The official sector will always have to step in to help.
This is one of the conclusions of a New York Fed paper (PDF) on the shadow banking system, which provides a good overview and definition of the sector.
No doubt there are more pressing problems in the world, but the other night some friends and I were grappling with what a hedge-fund manager of mutual acquaintance should call his new yacht, currently on order from Princess.
I suggested various epithets, from the funny to the lame (Bailout, Liquidity, Too Big to Sail, Floating Charge) but the winner was a banking friend, with the inspired Quantative Ease.
