Subprime Mortgage Crisis: Causes and Consequences
The subprime crisis provided a lesson for central banks, market regulators, financial institutions and consumers. In our opinion, central banks, which are statutory independent unfortunately have to cooperate with regulators, so that moral hazard of financial institutions is restricted and monetary policy is effective. Financial institutions will have to implement new controlling procedures, use more common sense, and understand that nothing last forever (even house prices can fall). We do not see securitization to be much of a problem, if used properly, it is good for economy. We also do not see a problem in creativity of financial institutions, as creativity spurs innovation. However, we think that regulators should restrict risky transactions and set fair rules for creativity without fraud and moral hazard. The lesson for a consumer is probably the hardest, because the consumer will pay the final bill for the misbehaviour of central banks, financial regulators and private banks in form of rising unemployment, decrease of personal assets (like equity and home), higher taxes and as a consequence lower purchasing power and lower standard of living. (abstrakt ze strony domowej wydawnictwa)
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