The 2008 financial crisis wouldn’t have been nearly as bad if the heroes of “The Big Short” hadn’t figured out how to make the banks bet on housing at 100:1 odds
Originally the bank bets were leveraged 1:1. You can lose a lot of money at 1:1 and be fine. After credit default swaps entered the market leverage became closer to 200:1.
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Leverage was clearly a factor. But fractional reserving stretches back to the 1400’s.... but clearly not at 200:1.
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