Recent events have illustrated that many large, complex institutions had exposures to subprime mortgages that ran across independent business lines, through off-balance-sheet conduits such as structured investment vehicles, and with respect to numerous counterparties such as monoline financial guarantors. But too few institutions fully recognized their aggregate exposure to risks that turned out to be highly correlated.
To achieve the preferred outcome, which is socioeconomic transformation, requires a rate of growth ranging between 5 and 7 per cent which is not attainable with the current economic policies and the existing economic resource base. Socioeconomic transformation requires the creation of a dynamic private sector which is export oriented and internationally competitive.