“Neither a borrower nor a lender be.”
William Shakespeare
It would seem from the above quote that Mr. Shakespeare did not believe in leveraged markets and probably he would never have put a credit derivative in his pension account. Certainly, financial markets have changed greatly from the times of McBeth and the Merchant of Venice and in spite of recurrent crises, our capital markets are more efficient and more functional for a better society.
However, the dangers of being a borrower or a lender have not changed much and still depend on one’s ability to understand risk in order to properly manage it.
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