Rogue traders are innocent

I have a sneaky sympathy for the latest crop of rogue traders, which were uncovered today in Credit Suisse. Their only offense was "inflating the value of mortgage backed bond investments". Central banks inflate all the time, but no one ever loses their job for that.

The sense of injustice grows when you consider that the mortgages underlying those bonds were used to finance inflated assets. However, no one ever was fired for selling an overpriced house, or providing the dodgy financing.

The lesson appears to be that you can inflate house prices, lend out money without any regard for risk, and the debauch the currency. However, you can not inflate a the value of a bond on your balance sheet.