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The key phrase is "demand for risk". It indicates that the writer has stewed too long in an economist babble-tank and can no longer make sense. He wants to explain the mortgage meltdown in terms of supply and demand, balancing the supply of mortgages with the demand for higher yields (risk). In economist babble, there is supposed to be some balance between the two, which is what gets traded in the market. What he fails to do, like most economists, is to examine whether the axioms of a free market are present before he launches off into his analysis.
1) Is there a low barrier to entry to the market for buyers and sellers? Only if you believe that Bear Stearns and Joe Sixpack negotiated that mortgage as equals before Bear repackaged it into a mortgage backed security (MBS). If you think that Joe Sixpack was lulled in by deceptive advertising by Countrywide, scratch that axiom.
2) Is there perfect information in the marketplace? Only if you believe that the buyers of the MBS knew exactly what Joe and his fellow borrowers had on their applications. If you think that these things got flipped faster than pancakes at a parish breakfast, scratch that axiom.
I tried the FT once with a trial subscription. They take the dogmatic classical view of economics going all the way back to Smith and Ricardo. If they could go back and find some quatrains from Nostradamus about economics, I'm sure they would include that, too. I gave up on this mumbo-jumbo as little better at explaining the world than astrology or reading entrails.
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