Ofte er det nok med høyere rente for å sprekke en boble
Trying to deflate speculation and keep inflation in check, the Bank of Japan sharply raised inter-bank lending rates in late 1989. This sharp policy caused the bursting of the bubble, and the Japanese stock market crashed.
It’s always difficult to identify a single catalyst that causes the bursting of an asset bubble, but in the case of the internet bubble, two factors seem to have played at least some part in the industry’s rapid decline, which began after the tech-heavy Nasdaq composite peaked on March 10th, 2000.
The first factor was rising interest rates. The Federal Reserve raised the fed funds rate (which informs most other interest rates) several times over the course of the years 1999 and 2000. Higher interest rates tend to motivate investors to move money out of more speculative assets (like internet company stocks) and into interest-paying assets like bonds.
Many of the ARMs had reasonable interest rates initially, but they could reset to a much higher interest rate after a given period. Unfortunately, when the Great Recession began, credit and liquidity dried up–meaning the number of loans issued declined. Also, interest rates began to rise, which reset many of the subprime adjustable-rate mortgages to higher interest rates. The sudden increase in mortgage rates played a major role in the growing number of defaults—or the failure to make the loan payments—starting in 2007 and peaking in 2010.
