I have found out that my wife, [Yale SOM economics professor] Sharon Oster, is the godmother of the current financial crisis. My finance buddies tell me that carving up mortgages did not really begin in earnest until the Case-Shiller housing price index was introduced. Before this, financial analysts did not trust the price numbers, but this changed with the Case-Shiller data. They concluded from the data at the time that the correlation among housing prices across regions was low, so they could bundle and lessen risk. (This, of course, with hindsight was stupid, since they ignored possible macro shocks, which in fact happened.) So where does Sharon come in? She introduced [Karl] Case and [Robert] Shiller to each other in the 1980s! Had she not done this, no Case-Shiller price index, no mortgage backed securities, no crisis. Sharon feels bad.
--Yale economics professor Ray Fair, via the Economix blog, on the genesis of a global financial meltdown