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Low Interest Rates 101: How the Fed Helped Create the Crisis

BDBlue's picture

Barry Ritholtz gives a great, user-friendly explanation of not only how low interest rates created the housing bubble, but also their direct connection to Wall Street's decision to securitize crappy mortgages by the boatload and sell them (essentially the low interest rates created demand for the securitized assets). For those, like me, who can't always connect all the dots on the economic crisis, this is incredibly helpful.

Also, Greenspan sucks.

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three wickets's picture
Submitted by three wickets on

that the lower rates initially were meant to provide a little boost following the dotcom crash and mini recession. But then 9/11 happened and everything got testosterone charged. Greenspan should have never held the rates that low all the way through 2006. He would not admit it, but 9/11 made a difference to his rate policy as it did to all our lives.

sleepy's picture
Submitted by sleepy on

Huge thanks for that post. I have a couple of friends which might be interested in this information even more then I am ;) .