Were you familiar with the workings of the subprime mortgage market?
Somewhat.
I understood how they would dice up mortgage payment streams into short term maturities and longer term maturities. They could sell the short term maturities to money market funds who had a very strong appetite for them.
Then they would take the longer term payments and sell them to investors seeking higher rates. And those investors had little interest in short term payments.
Unfortunately when the recession hit and mortgages failed. The long term riskier assets disappeared completely. But what roiled the market was when there was enough defaults on short term mortgage payments that one of the Money market funds broke the dollar.
That was the point where the banks stopped lending. And then W went on the news and assured the nation that we were in a crisis. And if we weren’t before, we were then. Im not sure he had any options, but there were warnings earlier that should have been addressed.