Ricardo Caballero makes a distinction between the role of leverage and that of aggregate risk concentration in the meltdown of the financial industry.
The problem in the current crisis was not leverage per se, but the fact that banks had held on to AAA tranches of structured asset-backed securities which were more exposed to aggregate surprise shocks [...]

A quick overview of how the Chinese economic system functions as a free market while still subject to potential authoritarian repressive action by the Chinese Communist Party.

The emergence of rapidly developing economies (RDE’s) such as China, India, Brazil and Russia needs little introduction. However, what is appealing to globally minded investors like us, is the speedy ascendency of companies based in these RDE’s who are now positioning themselves to challenge the incumbent industry leaders. Think about it. Your IBM ThinkPad is [...]