braddelong.substack.com/p/reading-reco…
Axel Weber (2013): "I was invited to a group of banks—now Deutsche Bundesbank is frequently mixed up in invitations with Deutsche Bank. I was the only central banker sitting on the panel. It was all banks. It was about securitizations. I asked my... 1/
Axel Weber (2013): "I was invited to a group of banks—now Deutsche Bundesbank is frequently mixed up in invitations with Deutsche Bank. I was the only central banker sitting on the panel. It was all banks. It was about securitizations. I asked my... 1/
... people to prepare. I asked the typical macro question: who are the twenty biggest suppliers of securitization products, and who are the twenty biggest buyers. I got a paper, and they were both the same set of institutions.... I said: "It looks to me that since the... 2/
...buyers and the sellers are the same institutions, as a system they have not diversified". That was one of the things that struck me: that the industry was not aware at the time that while its treasury department was reporting that it bought all these products its... 3/
...credit department was reporting that it had sold off all the risk because they had securitized them. What was missing—and I think that is important for the view of what could be learned in economics—is that finance and banking was too-much viewed as a microeconomic... 4/
...issue.... There was too little systemic views of banking and what the system as a whole would develop like. The whole view of a systemic crisis was just basically locked out of the discussions and textbooks... 5/END
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