Monday, October 4, 2010

It's All About Leverage

FLG has largely stopped blogging about financial reform because he came to a clear, simple conclusion -- it's all about leverage.* Consequently, increase collateral and you should be good. How much collateral should be required? Judgment call, as far as FLG can tell. But that's where the argument really is. Everything else is distraction and the result of either ignorance or political point scoring.

So, when Andrew Sullivan linked to this, it warmed FLG's little heart:
I’m not a big fan of attempts to mix ethics and aesthetics, but when it comes to politics and economics, I definitely think less is more. I was reminded of this when frequent commenter Malavel sent me a new Swedish regulation requiring at least 15% down-payments on all mortgages. That’s it, no bells and whistles, just 15%.


* Well, that and they passed a bill.

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