Second, the crisis has highlighted the fact that asset price misalignments can have different consequences depending on the specific market in which they arise. It may well be true that, in periods of booms in asset prices, expected capital gains are so large that interest rate movements of a standard magnitude would not be sufficient to alter investor decisions.
The origins of the recent financial crisis, however, are not in equity prices, but rather related to real estate and to the abnormal growth in securitised credit backed by residential or commercial properties. Leveraged financial intermediaries have also played an important role in the recent financial crisis.