I Do What I Do

by Raghuram G. Rajan

Risk taking inevitably means the possibility of default. An economy where there is no default is an economy where promoters and banks are taking too little risk. What I am warning against is the uneven sharing of risk and returns in enterprise, against all contractual norms established the world over – where promoters have a class of ‘super’ equity which retains all the upside in good times and very little of the downside in bad times, while creditors, typically public sector banks, hold ‘junior’ debt and get none of the fat returns in good times while absorbing much of the losses in bad times.

the theory of confirmation bias in psychology suggests that once one starts looking for insults, one can find them everywhere, even in the most innocuous statements.