How Debt Markets Have Malfunctioned in the Crisis

摘要

The financial crisis that began in 2007 is especially a crisis in debt markets. For example, the stock market peaked in October 2007 with the Dow Jones Industrial Average near 14,000 and was still near 12,000 in August 2008. While the Dow Jones eventually fell to 6,600 by March 2009, most of that fall happened in late 2008. However, problems in debt markets like the mortgage-backed securities market had been in full swing since August of 2007. A full understanding of what happened in the financial crisis requires inquiring into the plumbing of debt markets.