Crise du subprime: l’héritage de Greenspan

Selon Tito Boeri et Luigi Guiso, dans un article paru le 28 août 2007 pour EuroIntelligence, il est difficile de prévoir combien de temps durera la crise qui touche actuellement les marchés financiers du monde.

The subprime crisis was caused by an abundance of low-cost loans and triggered by the « expectation of defaults on subprime mortgages in the US » and is summarised by the authors thus: « an excess of liquidity has suddenly been transformed into a dearth of liquidity », with dealers finding it hard to sell the assets in their portfolios. 

Boeri and Guiso give three reasons for the current crisis:

• The low financial literacy of US households. 
• Financial innovation, resulting in the massive securitisation of illiquid assets. 
• The low interest rate policy followed by the Federal Reserve under Alan Greenspan from 2001 to 2004. 

Describing the third cause as « by far the most important », the authors claim that « without Greenspan’s policy », the subprime crisis « would never have occurred ». 

The EuroIntelligence article outlines the essential ingredients of the crisis:

• A mixture of bad information and the financial inexperience and « myopia » of investors. Financial literacy is low in the US – particularly among those who have taken out subprime mortgages – and this was exploited by banks and intermediaries. 
• The fast pace of financial innovation over the last ten years and the securitisation that it produced. It is now easy to liquidate a portfolio of illiquid credits (such as a combination of bank loans or mortgages) and package them into investor portfolios – ultimately opening the door to the credit market to poor-quality borrowers. 
• Greenspan’s legacy: the post-9/11 monetary policy of low interest rates and the collapse of the « new economy bubble » put a vast amount of liquidity into the global monetary system, massively reducing short-term interest rates and forcing investors and lenders to « take bigger risks to get better returns ». Families were able to borrow, and house prices soared. 

The authors conclude that the subprime crisis is the price we are paying for Greenspan’s « overreaction » to the 2001 recession, and calls on the ECB to avoid repeating this error and resist calls to lower interest rates in the eurozone. 

Suggesting that central banks « must be afraid of fear » in such crises and are acting « correctly » by injecting liquidity into the system, they claim that it is of utmost importance not to « overreact » to the subprime crisis by « sowing the seeds of a future crisis today ».