As we've watched the decline of the mortgage market over the last few months, a Minsky Moment became apparent. This is a moment in which a bull market cannot meet demands for liquidity, and things start to fall apart. The moment is named from Hyman Minsky, who taught that markets are inherently instable.
Investopedia says this about the Minsky Moment:
Speculative assets are hard to sell, so investors start selling less speculative ones to take care of the loans being called in. The selling of these investments means the market as a whole begins to decline. Soon after, the demand for liquidity will force the country's central bank to intervene. At this point the market is in a Minsky Moment.
Look back over the last six to eight months. Can you pinpoint the Minsky Moment of our mortgage market crash?
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