5/19/2023 0 Comments The big short explained“I would argue that there is one big inaccuracy that exists, I am sure, for dramatic effect,” he says. Yet there is one thing that the movie did fudge, according to Reiss. “And like the Jenga tower collapsing, the defaults led to more price declines, taking the entire market down with it.” “As soon as prices showed signs of weakness in a few bubble markets, speculation ended, prices started to decline, and then the scenario started to unfold of borrowers defaulting,” Smoke says. “There was a misconceived financial market illusion that the very process of ‘slicing and dicing’ mortgages into structured investment vehicles somehow magically neutralized the risk of even the lowest-grade tranches,” he says.īut the reality was catastrophically different. Our own chief economist, Jonathan Smoke, adds that Lewis’ book provides a solid foundation.
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