dyn99
That’s my summary of all the books I’ve read. I would say the two best ones for people to read are “The Big Short” by Michael Lewis (more entertaining than educational, but still lots of good information), and the better one is “Fool’s Gold” by Gillian Tett, which is the more educational of the two. The Financial Crisis inquiry report is also on my kindle currently, but it’s a hard read.
I also read a really bad book called “Rethinking the Great Depression”, which was poorly written and had no storyline at all (which any good writer will find a way to integrate), but did have good information on the government’s role in the Great Depression, which was quite interesting, as I have never studied that in depth before.
Also, something to note – those are my conclusions – not any one author’s. After doing a fair bit of research and reading a few thousand pages, if those 5 things had changed, we wouldn’t be where we are today.
I did purposefully leave out Wall Street’s demand for residential (and primarily subprime) MBS, as that demand never should have happened. Loose monetary policy and unnecessarily low interest rates (as well as rising demand from China) caused the yields on traditionally safe Treasuries to be lower than normal, causing investors to look elsewhere for “safe” investments. Because housing only rose in the US for the last 50+ years (at least in aggregate), and the brilliant ratings agencies had all these bonds rated AAA, investors assumed these securities were as safe as Treasuries (or safer now that treasuries are now AA+).
So if rates had been reasonable and the ratings agencies had correctly rated the securities as BBB- or worse, the coupons on those bonds would have been 8%+, driving down demand dramatically. No government intervention would have been required to dampen demand.