The jungle is dark, but full of diamonds

These types of volatile conditions often expose weaknesses that auditors and investors have missed, and this has proved to be so again. Northern Rock investors discovered that the ‘borrow short’ (and in significant quantities!) and ‘lend long’ policy that they thought was the alchemy of their board’s business model, turned out to be no more than fool’s gold. Leading international banks and credit rating organisations were embarrassed to discover that people with inadequate income, no assets and a poor credit history tend to default on their loans (something that any pawn broker could have...