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| Bad Money, by Kevin Phillips (Photo credit: elycefeliz) |
Thought the global financial crisis in 2008 was caused by subprime bonds, collateralized debt obligations (CDOs) and other Wall Street engineering? Think again. According to a new study, China, not Wall Street bankers, was responsible for the global crisis and the ensuing recession.
The study from the Erasmus Research Institute of Management says the saving frenzy of the Chinese created the cheap money, which fuelled the U.S. housing bubble and its collapse.
Heleen Mees, writer of the study and assistant economics professor at Tilburg University in the Netherlands, says that exotic mortgage products could hardly have been the cause of the U.S. housing market bubble and the its ultimate collapse.
According to the study, mortgages with those special features — like mortgage-backed securities and CDOs — accounted for less than five percent of the total number of new mortgages from 2000 to 2006. ... Continue to read.
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