Last week, an article written by Mr. Frank Partnoy, professor of law at the University of San Diego, appeared in the Financial Times and was subsequently picked up by The Wall Street Journal. Mr. Partnoy argues that the next global financial crisis will be found inside the CLO industry and that past is prologue.
I think he is looking under the wrong rock for the next global financial crisis and this note should serve as a letter to the editor in rebuttal, as it were. (Perhaps I’ll send Professor Partnoy his own personalized copy.)
Here’s the news flash: There will be another global financial crisis. Death, taxes, the cycle and Page Six misbehavior will never go away. However, history suggests that the next one will be less severe than the 2007-2009 meltdown which, one can hope will continue to be entitled to the honorific “The Great Recession” for many decades to come. Continue Reading