On 2/7/2011 12:16 PM, brad wrote:
> Okay, but how do you not include the role that financial innovations
> and policy changes played in the ability of lenders to increase their
> leverage. Surely, this increased the pressure to lend which helped
> with the inflation of the bubble. I don't see how it could simply be
> a one way relationship. Wouldn't the two work together to inflate the
> bubble?
Yes, exactly - policy changes and institutional evolution. Without those, the nascent froth would have petered out.
SA