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It worked out because the assets became risky from panic. The government is a large enough entity to stop the panic, and thus remove that risk.
by QuesnayJr 7y ago
It worked out because the assets became risky from panic. The government is a large enough entity to stop the panic, and thus remove that risk.
- lawn 7y agoThe assets were always risky, way before the panic set in. I recommend the books After the Music Stopped or The Big Short for background on the crisis. (Also the movie The Big Short is excellent).
- QuesnayJr 7y agoIf the government's strategy was so risky, then why did it make money? The government wasn't gambling that there wouldn't be a crisis -- they intervened right in the middle of the crisis. (I should have said became riskier, though. Of course the assets had some risk.)