In my September 1 blog
entry I argued that economists typically focus on managing the asset
side of the
balance sheet, and almost never on the liability
side, because they implicitly understand both the extent and the nature
of economic growth to be almost wholly a function
of the ways in which assets are managed.
The liability
side of the
balance sheet should have two
entries — one for 5 %
of the AAA and AA part
of the deal, which are loans levering up the single - A interest, and one for 5 %
of the BBB and below part
of the deal, which provide protection to the single - A tranche.