Final Word from Friday, October 10, 2008
As someone who often criticizes today's leaders for where they're taking us, I should admit my own bit of the blame for the current financial crisis. As a summer intern in 1986 at Trident Financial (a small investment bank in Raleigh, North Carolina), I failed to recognize that the collateralized mortgage obligations we were packaging would mushroom 20 years later into a global crisis. CMOs seemed innocent enough at the time. It was something else that turned me away from high finance. It was an international-finance professor at UNC-Chapel Hill who refused to admit that the Plaza Accord of Sept. 1985 was in effect a devaluation of the dollar. It's this kind of thinking - refusal to admit reality - that has brought us to where we are. The world actually tends to punish people who call a spade a spade. As I recall, that MBA professor gave me a C on my paper about the Plaza devaluation. Erik Best [Czech Republic N.C. CDO debt North Carolina depreciation]
Glossary of difficult words
mea culpa - (Latin) an acknowledgment of one's fault or error;
collateralized mortgage obligation (CMO) - a financial entity that pools mortgages and issues bonds using the mortgages as collateral;
to mushroom - to increase, spread or develop rapidly;
UNC-Chapel Hill - the University of North Carolina at Chapel Hill;
Plaza Accord - an agreement of five nations to, among other things, depreciate the value of the dollar vs. the German mark and Japanese yen by intervening in currency markets;
to call a spade a spade - to speak plainly without avoiding unpleasant or embarrassing issues;
MBA - Master of Business Administration;
C - merely a passing grade, with A being the highest.