SWNTQ

    How Instruments of Financial "Safety" Led to the 2008 Crisis   Introduction: In the years leading up to 2008, a sense of complacency pervaded the global financial system. It was believed that new financial innovations had effectively distributed risk, making the entire system safer. But this feeling was merely an illusion, the "illusion of absolute safety," which collapsed spectacularly, causing the worst financial crisis since the Great Depression.   From Subprime Mortgages to Financial Weapons of Mass Destruction: The crisis began in the U.S. housing market with the proliferation of "subprime mortgages" granted to borrowers with poor creditworthiness. The problem was not the loans themselves, but how they were transformed. Thousands of these loans were bundled together into complex financial instruments known as "Mortgage-Backed Securities" (MBS), which were sold to investors worldwide as "safe" investments.   The Failure of Ratin...

  The Economy of Illusion An Analysis of the Causes and Effects of the Dot-com Bubble (1995-2001) Introduction: In the second half of the 1990s, the world witnessed the birth of a revolutionary technology that would change the face of the planet: the World Wide Web. This emergence led to a wave of unprecedented optimism, creating the perfect environment for one of the largest speculative bubbles in modern history, the "Dot-com Bubble," where investors were no longer buying current assets, but were buying a promise of the future. The Emergence of the "New Economy" Paradigm: The intellectual engine of the bubble was the idea of a "New Economy." Proponents of this idea argued that the internet had nullified traditional valuation rules. Profits and revenues were no longer the most important metrics; instead, new metrics like "eyeballs" (user traffic), "network effects," and "market share" took precedence. This logic was used to ju...