Nouriel Roubini Nails a Serious Flaw in the Private Equity Scam

Morgenson, Gretchen. 2007. “Risk-Aversion Therapy on Wall St.” New York Times (1 July).

““Until now we were in a period where risk was underpriced,” said Nouriel Roubini, a professor of economics at New York University’s Stern School of Business and chairman of Roubini Global Economics. “Debt was so cheap that anybody could take a semiprofitable company private and leverage it. Now the price of this is going to be more expensive.”

“In both the L.B.O. market and collateralized loan markets there are practices that are the equivalent of the reckless lending in subprime mortgages,” Mr. Roubini said.”


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