Investors belatedly recognized the serious problems of poor underwriting and inappropriate loan structuring – practices that may have been facilitated by the securitization processes. Problems also spilled over to securities backed by credit card receivables, auto loans, and other asset classes. As a result, investors stopped purchasing most asset-backed securities and much of the secondary market stopped functioning.
There is however, a variety of explanations as to why we seem to be living in a more stable economic environment. It could be luck, in the sense that there may be fewer major shocks buffeting the global economy (Stock and Watson 2002).