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Firm releases Transaction Cost Theory of the Financial Crisis
Creative Investment Research, Inc. today released a comment letter sent to Mr. Phil Angelides, Chairman, Financial Crisis Inquiry Commission, outlining our Transaction Cost Theory of the Financial Crisis.
By: Creative Investment Research, Inc.
Why is this important?
Until the true nature of the crisis is revealed, the economy and financial markets will remain fragile and effective solutions to the problem cannot be implemented.
Unless one can focus on the true cause of a problem, one’s ability to correct the problem is limited. If a mechanic tells you that a problem with the transmission is the reason you car will not move, when in reality, you are simply out of gas, even if you “fix” the transmission,
your car will remain immobile.
How does this affect you?
Biased explanations provide the justification for lowering the quantity of loans granted and increasing the cost of loans granted to members of the targeted group. This reduces overall economic activity, eventually negatively impacting persons who are not members of the targeted group. Our theory does not attempt the statistically impossible task of blaming
the global financial crisis on one small demographic group. Racially biased explanations of the crisis do nothing to prevent a reoccurrence.
For a copy of the letter to the FCIC, send an email request with your name, organization and address to firstname.lastname@example.org
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Creative Investment Research is an investment research and management company. We research and create socially responsible investments and provide investment advisory services. The company was founded in 1989.