1 On the other hand, however, the devastating repercussions on US financial markets and intermediaries (transmitted worldwide through structured financial products) stemmed precisely from the interaction with the levels of debt of American households, spurred by the possibility that rising house prices offered for mortgage equity withdrawal. In many cases their debt came to exceed their home equity.
In this way, the expansion of liquidity and so of credit was accompanied by the ratcheting up of financial leverage, prompted among other things by the emergence of new business models. In his re-examination of the Depression in 1933, Irving Fisher noted: “Easy money is the great cause of overborrowing.