Deciphering the Liquidity and Credit Crunch 2007-08
34 Pages Posted: 29 Dec 2008 Last revised: 5 Dec 2022
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Deciphering the Liquidity and Credit Crunch 2007-08
Date Written: December 2008
Abstract
This paper summarizes and explains the main events of the liquidity and credit crunch in 2007-08. Starting with the trends leading up to the crisis, I explain how these events unfolded and how four different amplification mechanisms magnified losses in the mortgage market into large dislocations and turmoil in financial markets.
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