You have to face the following fact: all assets declined by about the same amount, and real estate around the world by the same amount, even in places where there were no subprime mortgages. Cause and effect is not very easy to disentangle.
This argument seems to have legs (at least if this one does). I’m not at all sure he has his facts right, but still…
What say ye?
via Examining the financial crisis with professor Eugene Fama.
Comments
2 responses to “Eugene Fama on the (Subprime) Meltdown”
The madness of crowds drives prices first above what they “should” be, then below. If all asset proves fell “about” the same, this is more likely due to madness than to the proper assessment of values.
@The Arthurian
As enabled and spurred on by the global financial system, which makes its money by lending…until it doesn’t…so has every (short-term) incentive to expand the bubble. The individuals in that system do great, cause they get their money before the bubble pops.