Risk Weighted Capital Adequacy: The Elephant In The Davos Jacuzzi

03.02.10


Based on that the “Risk Weighted Capital Adequacy Ratio” (CAR) is worked out, the regulator specifies a minimum number for this, typically 8% to 10%.

So if all the banks do their sums properly and keep their CAR higher than the minimum specified by the regulator, the financial system will be “Risk Free”, because if everything goes wrong there will be a “cushion”. Or that’s the theory.

There is only one thing wrong with that theory which is that it doesn’t work….evidently. In fact the “cushion” turned out to be more like one of those joke cushions that make a rude noise when you sit on them.

Here’s why:

These are the basic formulas (you can make it more complicated than this but I’m talking Big Picture here):

(1): Capital Adequacy Ratio (CAR)  ≥ 10% (say) = CAPITAL ÷ RISK

(2): CAPITAL = (Value of) ASSETS – LIABILITIES (i.e. for a bank, debts). Source: The Market Oracle

Visiting Dubai : Clickbank Diary

Visiting Dubai

Posted on | February 6, 2010 | No Comments

Dubai has fascinated me for many years, and it turned out to be quite different from what I had imagined. I had thought of it as quaint back streets, full of souks, with camels everywhere, and baking hot. In other words that Dubai would be quite old fashioned, and so I got a major surprise when I got there.

Firstly how westernised the airport was, so that although I knew I was in the Middle East, because of the few people dressed in traditional garb, apart from that all international airports are much like each other. It took the lack of bacon at my first breakfast to make me realise I was in an Islamic country.

There are mosques all over the place in Dubai, and the calls to prayer all sound different, but I discovered they all in fact are saying the same things. Praying need not be in a mosque but the first prayer must be carried out before sunrise.

In so far as shopping, visiting banks etc you need to get used to a different way of life. There seems to be quite early opening, then a four hour closure in the middle of the day, followed by opening until quite late in the evening. Local shops in fact open quite late.

I found it quite strange to see a man in traditional arab dress climb into a Mercedes, and ladies covered from head to foot, suddenly uncovering a mobile phone, and speaking on it.

We were visiting the gold souk in the evening, and it got quite late, but we never in any way ever felt threatened, the only problem my wife had were the toilets. She had to use a squatting toilet, the hole in the ground variety, and the smell almost made her vomit. If caught short, find a western hotel seems to be the answer!!

Beware of the heat of the sun, because it is a dry heat it can be a lot hotter than you think, especially around a hotel pool, or walking around, so you must use a high factor sun cream or you will get burned.

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Real truth about dubai 5 (United Arab Emirates)UAE/ world richest country

Real truth about dubai 5 (United Arab Emirates)UAE/ world richest country

rent a boat in dubai - News


Risk Weighted Capital Adequacy: The Elephant In The Davos Jacuzzi
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