The potential real effects from the repricing of risk
The financial crisis of August 2007 has its roots in several developments. The fall-out from defaults on loans in the sub-prime mortgage market in the United States has received widespread publicity. But monetary policy in the United States has been tightening since June 30 2004. That tightening, in turn, became necessary because of the prior stimulus to the economy by easy monetary policy after the dot.com crash in March 2000 and subsequent slowdown. So the current crisis has its roots in developments over several years. Understanding these roots is necessary to appraise the potential effects on the real economy from the current credit crunch.
The underlying models used here have been used by international agencies,
central banks, governments, fund managers and financial institutions around
the world for more than a decade. But running the models and designing
scenarios requires considerable investment in expertise and this has limited
availability to those with modeling expertise. Due to popular demand, we now
provide access to the valuable insights from the model by making available
results from topical scenarios directly to clients.
