Unintended consequences of earlier public policy choices
The roots of the crisis lie in the unintended consequences of policy choices made with respect to the financial sector over the last 30-40 years—which have allowed the volume of (all kinds of) debt in the global financial system to explode.
Immediately related elementsHow this works
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The Global Financial Crisis »The Global Financial Crisis
Long-term causes of the financial crisis? »Long-term causes of the financial crisis?
Unintended consequences of earlier public policy choices
Partial repeal of Glass-Steagall act »Partial repeal of Glass-Steagall act
Investment banks incentivised to move into riskier activities »Investment banks incentivised to move into riskier activities
Investment banks entirely outside the regulatory net »Investment banks entirely outside the regulatory net
Meddling with interest rates caused bubble »Meddling with interest rates caused bubble
Regulatory changes encouraged home ownership »Regulatory changes encouraged home ownership
US policies to encourage home ownership promoted risky lending »US policies to encourage home ownership promoted risky lending
US spending funded by credit »US spending funded by credit
Allowed commercial banks to compete with investment banks »Allowed commercial banks to compete with investment banks
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