The Institutional Risk Analyst

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The View from the Lake

Grand Lake Stream | One of the great things about fishing is that it provides an opportunity to reset perspectives, both through conversation with new friends and inspection of the surrounding terrain. We talk, we listen, we learn.

Ponder the large mouth bass (image below), which is considered an invasive species in Maine. Some knucklehead threw some large mouths into a lake a few years back and now they are embedded into the Maine wildlife system. The small mouth bass is considered the home town fish, a sacred native species, but in truth the small mouth was also introduced to Maine by humans a century and more ago. Which fish is the illegal immigrant, which the native? Of note, we can testify that small mouth bass have been citizens of the State of Virginia for many years.

micropterus salmoides

One topic of conversation this past week was the troubling evolution of the US financial markets, where artificially interest rate floors and federal REPO programs have replaced investors and markets. Risk is now a function of the whims and caprices of the Federal Open Market Committee. The dysfunction in financial markets, in turn, colors our perspective on deteriorating credits – like the "AAA/AA" rated sovereign known as the United States of America.