Thought the global financial crisis in 2008 was caused by subprime bonds, collateralized debt obligations (CDOs) and other Wall Street engineering? Think again.
According to a new study, China, not Wall Street bankers, was responsible for the global crisis and the ensuing recession (learn more) .
The study from the Erasmus Research Institute of Management said the saving frenzy of the Chinese created the cheap money, which fueled the U.S. housing bubble and its collapse.
Heleen Mees, writer of the study and adjunct associate professor at the NYU Wagner Graduate School of Public Service, said that exotic mortgage products could hardly have been the cause of the U.S. housing market bubble and its ultimate collapse.
According to the study, mortgages with those special features — like mortgage-backed securities (learn more) and CDOs (learn more) — accounted for less than five percent of the total number of new mortgages from 2000 to 2006.
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