[Cryptography] North Korea and Sony

John Levine johnl at iecc.com
Wed Dec 10 19:15:23 EST 2014

>You'd think that the values are ultimately grounded in the loans backed by land or
>machines in a factory, ...

That hasn't been true for over a century.  Loans are at least as
likely to be backed by a company's cashflow, or IP assets.  (Would you
rather have a slice of Google's cashflow or Taylor Swift's song
catalong or Detroit's land?)

Nonetheless, you are quite right that the financial system is
interconnected in ways that are often not apparent until it becomes
apparent in very exciting ways.  It was a big surprise when people
realized how much of the world's complicated financial assets included
insurance from AIG, and how widespread the damage would be if AIG

There have been efforts to decouple, notably increasing the amount of
capital that banks have to hold, which increases how much damage they
can absorb before passing it along, but of course they've strenuously
resisted that, becuase higher risk means higher returns in the short run
which means higher management bonuses.


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