While there’s a lot WIMWI doesn’t get quite right, there’s a lot more that it does get spot on! This blog post from Prof. J. R. Varma is an example …
I am humbled and honoured to have been in his class.
To put matters in perspective, $40 billion was roughly equal to the total shareholders’ equity of Barclays at that time (according to the June 30, 2008 balance sheet, shareholders’ equity was £ 22.3 billion or $40.5 billion at the exchange rate of 1.82 $/£ on September 18, 2008). In other words, Barclays was willing to take an unsecured intraday exposure to another bank equivalent to roughly its entire worth. I am sure that an overnight unsecured exposure of this magnitude would be regarded as reckless and irresponsible, but an intraday position was acceptable.
Read the original here: http://www.iimahd.ernet.in/~jrvarma/blog/index.cgi/Y2010/prudent-night-reckless-day.discuss
Interestingly, the $40B exposure seems to have had a positive (short-term) impact on BARC.L.