Bridge over ocean
1 March 2011 Financial Analysts Journal Volume 67, Issue 2

The Possible Misdiagnosis of a Crisis

  1. Richard Roll

Most explanations of the 2007–08 financial crisis—including excessive leverage, subprime mortgages, exotic derivatives, reckless risk taking, and easy money that spawned a housing bubble—are inconsistent with elementary principles of finance. The author explains the inconsistencies and suggests an alternative diagnosis that is fully compatible with rationality.

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