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The Subprime Crisis in Retrospect

01/10/2009
Dr. Michael Voigtländer

The International Monetary Fund estimates the losses caused by the subprime crisis at as high as one trillion US dollars. The turbulences on the financial market were triggered by high default rates in the US mortgage market, although the greatest turmoil was experienced in the securitization market. Here, too, lessons must be learned from the subprime crisis if the benefits that financial innovations offer are to be used in future without repeating the mistakes that were made this time around.

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