Subject:
complexity Complexity is a term used with reference to Post Modern Security Analysis and collaborative research, indicating the problems that arise from excessive complexity in modern financial markets, including such aspects as ‘too complex to manage’, derivatives, and the myriad products of financial engineering.
The 'insolvent bank' oxymoron
By John Schroy, on April 1st, 2009 | 
Banks, by their nature, are insolvent, requiring government guarantees of their liabilities to protect against bank runs. Over the last fifty years, the percentage of bank liabilities guaranteed by the government has fallen considerably, while banks, free from the shackles of the Glass-Steagall Act, have become increasingly complex.
Mark-to-market rules do not provide useful information to either bank depositors or investors, but may increase bank capital requirements, reducing the capacity to lend in the midst of a recession.
Post Modern Security Analysis
By John Schroy, on March 20th, 2009 | 
The Crash of 2008 revealed serious flaws in the rating agency system. The market had lost confidence in the major agencies because of the practice of selling ratings. Also, ratings had become a condition of default and agencies, to look good, rapidly downgraded issues just prior to default.
Reform of this system is not simple, requiring an entirely new approach consistent with the complexity of today’s market. Collaborative research with new Internet technology is a possible solution.
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