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.
