How much does blissful ignorance has to do with our current financial bliss?

Sir in your editorial comment “Securitised stability”, April 27 you mention that “there are benefits from dispersing credit risks across the economy: it makes banks less vulnerable for a start, and makes borrowing cheaper for millions of companies and households.” You are in general terms right but let us not forget that, on a world aggregate, diluting the risks does not really mean eliminating them and perhaps even the contrary if the dilution allows for the acceptance of more risks, as seems to have happened with the subprime mortgages in the US… and soon with the highly leveraged buyouts.

Let me advance the idea that what we have lately perceived as benefits from the shifting of credit risks could in fact also have much to do with the creation of a larger world reserve of “blissful ignorance” resulting from having designed so much sophisticated risk camouflage. A millionaire is a millionaire not only as long as he factually is one but also as long as he believes himself to be one, and it is only when the final cash-flow realities hits him that he might wake up to the fact that his portfolio has harboured some very new and peculiar risks.