Financial Shock
A 360° Degree Look at the Subprime Mortgage Implosion and How to Avoid the Next Financial Crisis
Editorial Review
Watching a financial crisis feels much like watching a natural crisis; as long as you are watching from distance. Although one is made by man and the other isn’t, there is something deeply mysterious about each; it isn’t quite clear how or why, or why now. Of course, each can create enormous damage and can be breaking for those directly involved. The repercussions last well beyond the immediate shock; nearly everyone is affected at least indirectly, and each leaves scars that never entirely disappear.
Book Reviews
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Wisdom to Share
Government’s role in the mortgage market is still large, but it has steadily diminished over the past 25 years. Private sources of mortgage credit overtook government sources at the start of this decade and now account for some 60% of mortgage debt outstanding.
It wasn’t the mortgage losses per se that ignited the shock, but they meant more broadly: Global investors had taken no too much risk, not simply in their subprime mortgage security holdings, but arguably in all their investments.
By 2006, most subprime borrowers started to put down little or no money of their own on their homes, meaning they had little to lose.
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