Slapped by the Invisible Hand:
The Panic of 2007
Gary B. Gorton(Author)
Editorial Reviews
Review
“In a few words, the little guys bank at regulated commercial banks with deposit insurance. So the little guys don’t panic when there are problems in the economy or in the banking system. The big guys put their cash in a shadow banking system where their “deposits” called repos are collateralized by asset backed securities. The system works well until the value of the collateral comes into question. This is what happened in the summer of 2007. The shadow banks had to dump asset backed securities en masse into the financial markets and there was on one to buy them. The price of asset backed securities as a whole began to fall and the shadow banking system froze up. Gorton points out that this is nothing other than a 19th century-style banking…
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Utopia, you are standing in it! 
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