WHAT WOULD BAGEHOT SAY ABOUT TOXIC ASSETS? I have posted before here and here on what Walter Bagehot had to say over a hundred years ago about the current financial crisis. Christopher Caldwell in the Financial Times had this quote from Bagehot’s LOMBARD STREET: “The business of banking ought to be simple. If it is hard, it is wrong. The only securities which a banker, using money that he may be asked at short notice to repay, ought to touch, are those which are easily saleable and easily intelligible.” What makes the financial crisis so difficult is that the bankers have devised assets which may take months or years to sell because they are not easily intelligible.

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