Guy Hands, the chief executive, said the firm's partners would waive the carried interest earned over the past four years in recognition of a steep fall in asset values.
But the result, if derivatives have been pumping up the demand for assets, could be a sharp fall in asset prices.That makes the naughty or nice question hard to answer.
Before we make too much of this distinction, however, we should notice that in either case the presence of foreign buyers will limit the actual fall in asset prices.
King said: "It's very important that we don't end up in a world in which everyone describes every increase in asset prices as a bubble, and every fall in asset prices as the bursting of a bubble".
It said preventing a steep fall in asset prices had increased the value of households' financial wealth, although it admitted that holdings were heavily skewed, with the top 5% of households holding 40% of these assets.
When markets are in peril, a small fall in asset values can wipe shareholders out.The banks' course was made possible by cheap money, facilitated in turn by low consumer-price inflation.
The potential deal also represents one of the latest examples of foreign companies looking to scoop up European businesses because of a drastic fall in asset prices caused by the Continent's economic problems.
It is important to note that I'd not get the full return from equity investment because my taxes would still have to pay the outstanding liability to older workers.The recent, sudden fall in asset values does highlight a major weakness in the way private accounts are often implemented individual cohorts end up bearing an undesirable amount of asset risk.
Without a sustained fall in asset prices, it is unclear whether they will make back much more than they spent.An executive at a large hedge fund that went "net short" on China in the spring says that the trade is riskier now that equity prices have declined so much.
If the bank lends so much that its equity slice approaches zero – as happened in some banks prior to the financial crisis – even a very small fall in asset prices is enough to render it insolvent.
