commentary : the panic of 2007

professor gorton has given us an exceptionally informative picture of the nuclear core of the financial crisis —the fragile structure of subprime mortgage-backed securitization and the chain of derivatives built on top of it. those who have the patience to read a long paper filled with lots of important details will be rewarded with a much better understanding and appreciation of the reasons why we fell into the current abyss. it is also an invaluable account for those charged with cleaning up the mess, including regulators, as well as generations of economists who will study the crisis.