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Thread: Home price drops exceed Great Depression: Zillow

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    Re: Home price drops exceed Great Depression: Zillow

    Quote Originally Posted by Phoenix View Post
    At point in the history of the United States did we decide to start printing money based on a whim instead of backed by a commodity? 1934. Part of the New Deal. Not to mention FDIC and FHA.
    That had nothing to do with the cause of the housing bubble.

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    Re: Home price drops exceed Great Depression: Zillow

    Quote Originally Posted by Dirty Harry View Post
    That had nothing to do with the cause of the housing bubble.
    Sure it did. What do you think lets the fed flood the economy with money? Fiat Currency that was instituted as part of the screw deal.
    You even claim that the availablity of cheap money from the fed caused the crisis.
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    Re: Home price drops exceed Great Depression: Zillow

    Quote Originally Posted by Phoenix View Post
    Sure it did. What do you think lets the fed flood the economy with money? Fiat Currency that was instituted as part of the screw deal.
    You even claim that the availablity of cheap money from the fed caused the crisis.
    Greenspan cut interest rates and flooded the economy with money to pull us out of recession.. It was his decision. A very bad one and he should have known it would cause a bubble. Other people did. What happened 75 years wasn't the problem.
    Last edited by Dirty Harry; 01-28-11 at 05:30 PM.

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    Re: Home price drops exceed Great Depression: Zillow

    Quote Originally Posted by Dirty Harry View Post
    Greenspan cut interest rates and flooded the economy with money to pull us out of recession.. It was his decision. A very bad one and he should have known it would cause a bubble. Other people did. What happened 75 years wasn't the problem.
    You don't see the fact that one man can make decisions that ultimately cripple the economy as a problem?
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    Re: Home price drops exceed Great Depression: Zillow

    Quote Originally Posted by Phoenix View Post
    You don't see the fact that one man can make decisions that ultimately cripple the economy as a problem?
    Yes. Greenspan was a huge problem.

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    Re: Home price drops exceed Great Depression: Zillow

    Quote Originally Posted by Dirty Harry View Post
    Yes. Greenspan was a huge problem.
    And now the bernanke has taken his place...

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    Re: Home price drops exceed Great Depression: Zillow

    Quote Originally Posted by Dirty Harry View Post
    Yes. Greenspan was a huge problem.
    and the new deal granted him the power to do what he did.
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    Re: Home price drops exceed Great Depression: Zillow

    Quote Originally Posted by BmanMcfly View Post
    And now the bernanke has taken his place...
    Absolutely correct. He is a Greenspan mirror image. I used to believe in the system, but it's broke. It's ONE GUY with no checks or balances to limit his power. Not to mention it seem the Fed Chair has the President's hand up his ass and whatever he wants gets done. These people are going to print us right out of existence.
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    Re: Home price drops exceed Great Depression: Zillow

    i find the final point here most telling. the whole damn thing can be laid ultimately at the feet of the fact that Americans have got alot of stupid ideas about Debt; and how it is anything but a danger and a drag.

    ...Yes, this crisis was avoidable. To avoid it, we would have had to do a number of things differently. The first is to alert the authorities, beginning in the 1930s, that federal policies designed to encourage homeownership — well-intentioned though they have been — would create, and today continue to sustain, a set of economic incentives driving vast amounts of capital from around the world into the U.S. residential real-estate market. From the Federal Housing Administration to Fannie Mae and Freddie Mac to the mortgage-interest deduction, U.S. government policies distorted the market, creating a massive misallocation of capital under the naïve theory that housing prices only move in one direction: up.

    The second action would be to prevent the dot-com bubble of the 1990s, of which the housing-market meltdown was both an echo and a consequence. Like the real-estate bubble, the dot-com bubble was cheered on by the American government, the American consumer, and the American banker, because nearly everybody likes appreciating asset prices and the illusion of wealth that accompanies them. When the dot-com bubble burst, Washington responded the way Washington always responds: by slashing interest rates, hoping that a sluice of cheap money and easy credit sloshing through the economy would stimulate productive economic activity, or the illusion of productive economic activity, sufficient to disguise the damage done by the bubble. Having been burned by unprofitable start-ups at home and disappointing emerging-market investments abroad, a great many Americans decided to invest that easy money in houses. Washington was keeping interest rates down and encouraging the loosening of mortgage-lending standards; at the same time, Washington’s creatures, Fannie Mae and Freddie Mac, helped give the mortgage market enough liquidity to alarm Noah. They were helped mightily in that endeavor by the rise of massive savings in China and elsewhere in the developing world, all of which went looking for somewhere to invest: Where better than the American mortgage market, where a great many of the underlying loans were insured by the government or its proxies?

    Third, we would need to convince a great many Americans not to take out mortgages they could not afford should their houses fail to appreciate, and convince a great many financial managers not to make bad investments large enough to bring down their firms....

    The dot-com bubble actually destroyed more wealth than did the decline in housing prices; the housing meltdown became a crisis because the related securities losses were concentrated in a small number of firms, and because those firms were dramatically over-leveraged. If there is a public-policy proposal to be extracted from this mess, it is that in a world of “too big to fail” banks — and, like it or not, that is the world in which we live — large financial institutions should be subject to tighter leverage controls, with higher standards for capital reserves and liquidity...

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    Re: Home price drops exceed Great Depression: Zillow

    well with the fed now leveraged at a multiple of 81x, we'll soon see how much of a mistake this was.

    (people laugh when i say it, but i say it so you'll be amazed when it happens. get ready for $20 can of corn.)
    Democracy is two wolves and sheep voting on what's for dinner. Liberty is a well armed sheep willing to contest the vote.

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