This innovation could lead to the next financial crisis

History might not repeat itself, but it does rhyme. Robert Z. Aliber, an emeritus professor of international economics at the University of Chicago and expert on financial crises, has noted that an innovation is at the root of every financial crash. In 1987 it was portfolio insurance; for the Great Recession in 2008 it was securitization. The obvious candidate for the next crisis is Exchange-traded funds, or ETFs.

What is an ETF? It is a pool of securities whose shares are traded in real-time...

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