Tag Archives: real estate

Financial innovations behind the US real estate boom and bust of 2002-2008

As we commemorate the 10th anniversary of the Lehman Brothers bankruptcy, which marked the point where the US financial system truly moved into crisis, it’s worth reviewing the innovations that led to the real estate bubble that lay behind Lehman’s (and Bear Stearns’) problems: the separation of mortgage origination from who owned the debt; securitisation;… Continue Reading

The central importance of housing to the British financial system

In Britain we seem to have a love affair with the property market. Home ownership is 69%, not especially high, but average house prices are a constant topic of discussion, mainly because property in the prosperous south east of ¬†the UK (including Cambridge) is very expensive. The latest Bank of England Financial Stability Report shows… Continue Reading

Bankers were deluded rather than evil – some evidence

A great piece of research¬†from the authors at the University of Michigan and Princeton University (*) tests the hypothesis that the bankers inside the sub-prime mortgage bubble knew it was all too good to last. They find the hypothesis false. Many of the bankers in mortgage securitisation (transforming bank mortgage loans into bonds that were… Continue Reading

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