Subprime Crisis and Instability of Global Financial Markets

  • Ognjen Radonjić University of Belgrade, The Faculty of Philosophy, Serbia
  • Miodrag Zec University of Belgrade, The Faculty of Philosophy, Serbia

Abstract

In order to prescribe adequate remedies to treat the current financial crisis one has to understand what in the first place went wrong. An age ago, older generations wrote that disease could not be cured without an accurate diagnosis. In contrast to mainstream “efficient markets hypothesis” we argue that Minsky’s financial instability hypothesis gives numerous valuable insights into sources and possible consequences of current global financial crisis. Furthermore, two decades ago Hyman P. Minsky predicted possible developments and perils of ever growing process of securitization of illiquid assets.


Key words: Speculation, Debt, Financial instability hypothesis, Ponzi unit, Securitization.
JEL: E12, E44, G01.

How to Cite
Radonjić O., & Zec M. (2010). Subprime Crisis and Instability of Global Financial Markets. Panoeconomicus, 57(2), 209-224. doi:10.2298/PAN1002209R
Section
Professional paper