From Beirut to Economic Salvation

It was an unpopular move at the time, but today, it may have saved his nation from sharing the rest the world's economic ruin: Lebanon's central banker, Riad Toufic Salame simply issued a blanket order back in 2005 barring any bank in his country from investing in mortgage-backed securities.

He says the mortgage-backed securities worried him from the start. He watched curiously as investment bankers engaged in what he calls "rituals" to please the credit ratings agencies and got back such safe assessments of their products. He didn't get it. Why were these considered safe investments? They were just too complicated. They went against a major tradition in Lebanese and Middle Eastern banking: Know to whom you're fronting cash and who's going to pay you back.

Via Kevin Drum.