KillerApps Macro: Boom and Bust
Some financial institutions could commit moral hazard by leveraging their implicit high credit ratings and tax-payer guarantees to load up on high-risk debts and obligations.
Run-away securitization of housing mortgages abetted by loose credit rating, shaky credit default swaps, and cheap money led to a huge housing bubble in the US.
Jobless benefits cushion the fall of disposable income during economic recessions.
The leverage cycle could amplify business cycles apart from routine monetary policies via interest rates.
The unemployment rate closely tracks the business cycle and reflects the vicissitudes of economic fortunes.
Easy money to stimulate China’s economy has inadvertently led to a speculative garlic bubble.
Securitization of mortgage loans has fueled a US housing bubble whose bursting has put one in four mortgages under water.
The low interest rates intended to stimulate the recessed US economy after the US housing bust in 2007 – 2009 have inadvertently led to a housing boom in Hong Kong when Hong Kong has to lower its interest rates to defend its dollar peg.
Total 8 records
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