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Econ Notes Sept 15,2010 - 3 credit rating agencies asleep...

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Econ Sept 15,2010 1940s: 40% of the U.S. owned home huge subsidies to ownership 2004: 70% 2002-2006: "bubble" in housing, increase in prices 1. Many Homeowners borrowed "too much" why? expect prices to go up 2. Banks lent "too much" NINJA mortgage (No income, no job or assets) Also banks sold mortgages "mortgage-backed securities"
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Unformatted text preview: 3. credit rating agencies asleep 4.congress relaxed regulations firms took crazy risks Lehman fails 9/15/2008 crisis of confidence 9/17 + 9/18 financial mkts near "systemic collapse" Demand schedule table of P+ Quality demanded Law of demand "all else equal, inverse relationship P+quality demanded...
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