Monday, November 17, 2008

NYT Blames Phil Gramm


1 comment:

Hazel Meade said...

Gramm is basically right about credit-default swaps.

They did their job. They distributed the risk throughout the financial market. That’s why we are getting the problem cascading from one place to another. But people tend to focus only on that, when the problem is really more that the housing bubble itself was so huge that even with the risks distributed, it’s enough to cascade several times over.

I suppose you could argue that without credit default swaps the problem would have stopped at the mortgage lenders and not bled over into other parts of the market.

Of course, if we tie the market up there may be few and smaller bubbles, but there will also be overall slower growth.