Summit Notebook
Exclusive outtakes from industry leaders
How subprime is like Mt. Fuji
Analogies abound when it comes to assessing just how far the world has come in coping with the subprime mortgage crisis originating from the United States.
In American terms, the nine innings of baseball games are often invoked. In Japan, it is often how far up the mountain you’ve climbed.
Tatsuo Tanaka, deputy president of Bank of Tokyo Mitsubishi-UFJ, told the Reuters Japan Investment Summit that some fear the subprime debacle means one mountain peak has been scaled but another looms ahead.
While he doesn’t share those worries, the uphill slog is not over yet. “We are already past the fifth station,” he said in response to a question about where we stand in the crisis, referring to the half-way point in climbing a mountain in Japan. “The biggest part of the confusion is behind us. But in terms of impairment of capital, it is not over,” Tanaka said.
Is a triple-A a triple-A a triple-A?
Credit ratings agencies have been under fire from investors for giving the highest ratings for what turned out to be risky assets.
But Standard & Poor’s President Deven Sharma told the Reuters Investment Outlook Summit investors just didn’t really understand what a triple-A rating meant.
“It’s a question a lot of people ask: Is a triple-A a triple-A a triple-A?” Sharma said. “We reflected on it and recognised one of the things we didn’t explain to investors as much as we should have done is what comparability of ratings really means.”
To listen to what he had to say, please click here
