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More transparency would definitely help, but I am not sure how solvable the problem is at a fundamental level. As Steve Waldman points out (http://www.interfluidity.com/v2/716.html), there is a large confidence interval around any measure of asset worth, and hence of capital levels.

I am not sure what the solution is, but increased transparency, simpler measures such as the leverage ratio, and potentially the separation of complex securities businesses from simpler deposit-and-loan businesses all come to mind.



You could probably say that confidence is a a rule of thumb that uses crowdsourcing (or group think) the assessment of risk - but transparency can serve to improve this even further. Confidence in people/system is derivative (and has feedback from) hard numbers.




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