May indicate that the financial crisis, financial and even will bring its own risks. One mechanism may be due to the invention of the mortgage. However, no mortgage, whether the situation is better? On this simple question, I think, first of all must see, there are some people benefit from these loans. For individual homeowners, it provides social benefits. Development is the intention of the mortgage market, individual homeowners will be diluted to a wider range of risk and the whole world.
If the calculation of the U.S. market, the scale of bad mortgage loans, you will find it is not a very large number, so if a simple fall with the loss of housing prices, mortgage crisis measure, you will find that it will not cause the world So a big impact. The real problem lies in the system. Banking is fragile, the insurance company AIG is fragile. We did not estimate the fragility of the financial institutions. So, not a problem of financial instruments, institutional structure is the problem.
Now, the market often criticized hedge funds and the role of speculators, as if they are wicked, greedy they simply selfish. But my research shows that they are in the health of the market forces. Hedge funds are always aimed at the lack of efficient capital markets where, in order to obtain a return. Deviations such as stock valuations, they will buy; public access to information and investor information is inconsistent, investors value the company more than the knowledge of the public, they will also take to pay off; investor trading behavior of non-rational , herding lead to market prevailing pessimism, the hedge funds also have the opportunity to make money. In addition, hedge funds can also use the regulatory restrictions make money, and so on.
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