Wall Street believed in the stability of the housing market from "summary" of The Big Short by Michael Lewis
Wall Street's faith in the housing market's stability was unwavering. The belief that housing prices could only go up was deeply ingrained in the minds of the traders and investors who were driving the market. This conviction was not just a passing fancy; it was a core tenet of the financial world's belief system. The idea that housing prices could decline, let alone crash, was dismissed as unthinkable by the majority of those on Wall Street.
The prevailing sentiment on Wall Street was that the housing market was a safe bet, a sure thing. This belief was bolstered by years of steady price appreciation and seemingly endless demand for real estate. The notion that housing prices could fall was not even entertained by most investors and analysts. To them, the idea of a housing market collapse was as ludicrous as the notion of the sky falling.
Wall Street's confidence in the housing market's stability was further reinforced by the complex financial instruments that had been created to spread and mitigate risk. These instruments, such as mortgage-backed securities and collateralized debt obligations, were seen as innovative tool...
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