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An Orderly Withdrawal From the Euro: Like an Orderly Car Crash
CNBC.com | April 04, 2012 | 05:56 AM EDT

During my time on the Treasury desk at KBC Financial Products in London, I was inordinately proud of a synthetic securitization transaction we structured, exotically named Picaros Funding LLP (a Belgian bank, so we named it after a Tintin story, naturally), which not only saved a considerable amount in funding costs but also won Euromoney’s “European Structured Finance Deal of the Year” award for 2005. I dined out on Picaros for quite some time, until the boss pointed out quite rightly, “Remember, you’re only as good as your last deal!” It’s the same for everyone—Fernando Torres moved from Liverpool to Chelsea for a record breaking £50 million ($79.3 million) and then took months before he scored a goal for his new club. His track record at Liverpool counted for nothing during this fallow period.

What is the connection with macroeconomics? Only this: Beware of employing sacred cows who made their reputations, however formidable, in the past when conditions were quite different, in policy making today unless one is prepared to challenge their recommendations whenever these are not necessarily appropriate. In the aftermath of the financial crisis, governments turned to individuals who may have worked in a bank 20 or 30 years before, if they worked in one at all, when looking to draft regulatory responses to the crash. Their responses may not be workable for current times.

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