Pretty good summary here: http://en.wikipedia.org/wiki/Causes_...housing_bubble
Last edited by AdamT; 01-12-12 at 09:52 AM.
Last edited by Samhain; 01-12-12 at 09:56 AM.
The bubble required more than one factor to get started, and then once it got a head of steam, more accelerants were added. 1998 is when the stars started to align for this. All of that has been noted already.
To add further to my prior point, my position with regard to FF is not so much that they "caused" the bubble, but that it was their exponential expansion (to approximately 50% of all the market), combined with how they were used to bring new demand into the market (sub-prime underwriting to support the HUD mandates and lawsuit settlements .... see Cuomo video), combined with excessively low interest rates (the Fed at root of that), which created the perfect storm which produced this bubble. All of those were phenomenon that most of us had never seen even one of in our lifetimes. And none were caused by the private sector, or Wall Street.
That the private sector took advantage of the profits to be had with this bubble should surprise no one. Folks building and/or buying and selling homes, whether it be someone down the street with one home, or Merrill Lynch with a bundle of 5000 homes, is what we do. Good deals, bad deals, the process is essentially nothing new. Mortgage backed securities are a fine investment in normal times. But when bought during a bubble, are no different than what folks who are currently underwater in their mortgage did on a local scale.
Now, if you want to argue bail-outs, or "too big to fail", I submit that is a different debate.
Last edited by Eighty Deuce; 01-12-12 at 10:37 AM.
“Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.” John Maynard Keynes
Certainly you haven't addressed my point that housing prices actually fell for nearly have the period when F&F were growing so quickly.
The fact is that it is the Democrats and liberals who demonize the private sector, and will do all in their power to shift blame away from government, and onto the rich and Wall Street and Capitalism in general. It is a consistent theme with Obama and his class warfare reelection campaign, with moonbats like the Occutards in the Obamavilles nationwide, and with morons spokespeople for the liberals such as Wasserman Schultz.
And with the utter failure of some posters here.