A study from Erasmus Research Institute of Management, a Netherlands-based think tank, finds China, not Wall Street bankers, was responsible for the global crisis and resulting recession. Rather than subprime bonds, collateralized debt obligations (CDOs) and other "financial weapons of mass destruction" it was the saving frenzy of the Chinese that created cheap money, which in turn fueled the housing bubble in the United States, the think tank found.
The study's author, Heleen Mees, is assistant economics professor at Tilburg University in the Netherlands. She says that since exotic mortgage products accounted for less than 5% of the total number of new U.S. mortgages from 2000 to 2006, they could not have caused the housing market meltdown, CNBC reported.
"Mees, author of three books and contributor for Foreign Policy magazine, says it was the 'loose' monetary policy of the Federal Reserve at the beginning of the decade which sparked a refinancing boom in the U.S. in 2003 and 2004 and a growth in personal spending," the network said on its website. "This U.S. spending binge fueled economic growth in China and in turn boosted total savings in that country."
