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What caused the current liquidity crisis? Poor loans made to borrowers who couldn't pay and packaged as higher grade CDO's. The borrowers defaulted in enough numbers to create the credit crunch leading to the banking crisis ...not the other way around. Not to mention the knock on effect on their...

The question is what is the dollar value of home mortgages v say a large investment bank to the economy?? So a quick death is preferable to a long drawn out one? What is the effect of the US consumer closing up shop on the US economy? Without a doubt if a large investment bank (not Bear...

If that is the case and comparing it to the investment banks (esp by $ value)....is it too big to fail ??? As opposed to have a downturn :) Cheers Shane

Hi trendsta I believe interest rates rise in a boom as the RBA attempts to slow growth to managable levels. So we had a booming economy, some of the money moving from the stock market crash of 1987 to property fuelling large price increases, smart money moving to cash, a recession induced in...

Perhaps this may be a clue? I bought at 12% in 1988 (Heritage Building Society)...hit 18% in quick time. Long periods of elevated interest rates hit the investor, business and the consumer. There was a recession "we had to have" in the early 1990's whose effects weren't diminished until the mid...