1. The Financial Markets and Fear Itself.
- Author
-
JENKINS JR., HOLMAN W.
- Subjects
SUBPRIME mortgages ,SECURITIES industry ,MORTGAGE-backed securities ,HOME prices - Abstract
The article discusses the U.S. subprime mortgage lending phenomenon and urges that Wall Street firms did not intentionally orchestrate a financial meltdown among buyers of mortgage securities. Large companies such as Merrill Lynch and Citigroup retained vast holdings of these securities. Furthermore, the collapse of firms such as Bear Stearns and Lehman Brothers shows that the economic recession accompanied by bad assets was unanticipated by their providers. The author explains why risk models and assumptions could have never accurately predicted the drop in home prices and states that risk is an inherent element of the market economy. The interconnectedness of national economics and global political culture is examined.
- Published
- 2009