Financial bubbles can be destructive when financed by debt. The global financial crisis was triggered by the debt-driven U.S. housing bubble. In that respect, Mr. Brunnermeier says, bubbles aren’t necessarily bad things. Because credit plays such a central role propagating the most dangerous bubbles, regulators have directed most of their attention in the postcrisis era to financial-system interventions. financial sector debt has fallen to $15.7 trillion in June from $18.0 trillion in 2008, according to the Fed.

Source: Wall Street Journal September 22, 2017 14:15 UTC