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If banks can do risk analysis, so can non-banks.

The difference isn't between analysis and no analysis, it's between being on the hook for the risk directly, which is likely to concentrate the mind somewhat, and attempting to palm it off on to some third party - either by direct insurance, or by spreading out that the risk so thinly that it stops appearing risky.

The irony is that to some extent this is what's been happening already. Wall St has almost been acting in a peer to peer kind of a way, but with the - valid - assumption that risk can always be shared with the government, making it almost risk free.

But there's no certain reason why peer to peer has to be this irresponsible - any more than there's a certain reason why banking can only be done in a boring and safe way.

Obviously it can be done in other ways too, as everyone has discovered.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Mar 23rd, 2009 at 06:56:39 PM EST
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