"Uncertain about the solvency of counterparties, repo depositors became concerned that the collateral bonds might not be liquid; if all firms wanted to hold cash—a flight to quality—then collateral would have to decline in price to find buyers. This is the crucial link between the subprime shock and other asset categories."
Gary B. Gorton, Slapped by the Invisible Hand: The Panic of 2007
Gary B. Gorton, Slapped by the Invisible Hand: The Panic of 2007
ICT4PE&D
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