print
Bear Stearns and the Narratives of Systemic Risk
by kleinbl00

    he systemic risk question you need to ask yourself today is the same question you needed to ask in 2008:

    What is the micro-level truth of the potential real-world shock (home price appreciation then, virus biology today), and does that micro-level truth threaten the common knowledge surrounding a levered business model and securitized asset class of enormous size (mortgage-backed securities then, global trade finance and collateralized loan obligations and similar debt securitizations today)?

    I know that last sentence was a mouthful. But it’s worth parsing.