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That works great until you are caught highly leveraged when suddenly everyone has severe doubts about the counterparty quality of both creditors and debtors.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Dec 19th, 2011 at 02:06:07 PM EST
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That's true, but that's always the problem of banks, which are in the business of making commitments to some and accepting the commitments from others -- they are in the social relationship, or governance, business, not the work of building and risking actual things.  So business school measures like NPV and IRR really don't mean the same thing for banks that they might for actual investors of one's own capital.
by santiago on Tue Dec 20th, 2011 at 12:11:47 PM EST
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