Wednesday, December 12, 2007


In OpinionJournal, Alan Greenspan places an emphasis on the roots of mortgage crisis. He concludes that numerous price bubbles cannot be safely by policy initiatives.

Overnight, financial risk surged the price of risk, thus pushing the interest rates on various assets compared to relatively riskless U.S. Treasure Securities.

Global economic growth increased steeply and the level of risk suddenly became underminded which led to overnight speculations and mispricing of secured sub-prime mortgages. Thus, a crisis was a well-known accident waiting to happen sooner or later.

Source: Alan Greenspan, The Roots of the Mortgage Crisis, Opinion Journal, Wednesday, December 12, 2007 (link)

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