Breaking the Ice: Government Interventions in Frozen Markets.

The recent financial crisis began with a fall in housing prices in 2006, followed by an increase in delinquencies on subprime mortgages in early 2007) As subprime borrowers began to default on their mortgages, the value of assets backed by these loans &dined, resulting in substantial losses on the balance sheets of many financial institutions in the United States and across the globe. However, as many have noted, these losses were too small to account for the crisis that followed? Therefore, a central challenge in the aftermath has been to understand how relatively small losses within the financial sector could be propagated and amplified to the rest of the economy. [ABSTRACT FROM AUTHOR]