Presentation on theme: "The sub-prime crisis and equity markets: Bandaid solutions for a bleeding jugular? by Alex Frino Finance Discipline."— Presentation transcript:
The sub-prime crisis and equity markets: Bandaid solutions for a bleeding jugular? by Alex Frino Finance Discipline
This talk The US real-estate bubble bursts How the burst found its way into equity markets and across the pacific The band-aid solutions put up by equity market regulators ASIC: A case study in a firm decisive regulator
The real estate bubble Source: Shiller (2008), The Sub-Prime Solution
Shillers offers lots of explanations for the bubble An “epidemic” driven by house price optimism Information cascades But not why it burst….
A contributor to the “epidemic” Comparable sales models contributed to the epidemic: –AVM’s –Desktop/Drive-by valuers –Valuation agents
Source: Office of Federal Housing Enterprise Oversight When did the bubble burst? a first look
Source: S&P When did the bubble burst? a second look