Unraveling the Financial Crisis of 2008

Abstract

In the fall of 2008, the world economy experienced a “once-in-a-century credit tsunami” (Greenspan 2008, 1). Centered in the market for homes and mortgages, the mechanisms that unleashed this financial tidal wave are many and complex. Indeed, an inadequate grasp of modern finance on the part of “the most sophisticated investors” and regulators “in the world” was itself a contributing factor (Greenspan 2008, 3).