It makes it clear that starting in 2000, housing prices got seriously out of whack.....
Yeah, from 96-00, things were pretty much on par with the two booms in the 70s and 80s, and then it just kept on going.
Off-topic discussion. Wanna talk about corsets, duct tape, or physics? This is the place. Detailed discussion of any current-season TV must be whitefonted.
It makes it clear that starting in 2000, housing prices got seriously out of whack.....
Yeah, from 96-00, things were pretty much on par with the two booms in the 70s and 80s, and then it just kept on going.
According to the Irvine Housing Blog that I read occasionally (a really excellent look at the housing bubble, especially in southern CA--Irvine, CA is at the heart of said bubble and, sadly, has one of the highest rates of foreclosures in the country), that post-2000 upswing is mostly due to the change in mortgages shifting from 20% down fixed rate 30-year ones to zero down, negative amortization, and second mortgages for the 20% downpayment. This opened up the housing market to those who couldn't afford to save the 20% downpayment.
This is also reflected in the drop in Americans' savings rates.
Sometimes I fear we're heading for a perfect storm of... economic badness. The subprime fiasco, collapse of housing prices, skyrocketing energy costs, huge US budget and trade deficits and the resulting falling value of the dollar, consumers cutting their spending way back out of fear for their jobs....
And here's a graph comparing the U.S. housing bubble to the Japanese housing bubble of the 80s. The Japanese market peaked in 1990, and it took (or maybe still is taking) more than 15 years to revert to the mean.
Basically the Fed and the national government rolled the dice on the housing market keeping the economy going post tech boom crash and 9/11, by enacting a series of policies and preventing the states to enact contrary policies.
At the beginning it was a half-decent bet, but by 2003-4 it was definitely turning into a bubble, but there was no one willing to take the risk unwinding it. By 2006-7 virtually all of Wall Street knew that it was a bubble, but as long as everyone pretended it wasn't, well, the bills wouldn't come due.
Eventually someone had to panic and the whole thing started to fall apart like Jenga...
I was reading somewhere last night (economic blog--Beat the Press, possibly? don't remember) that, even if everyone spent their stimulus check on a purchase, it won't do anything for the economy as a whole. What will revitalize it will be an increase in exports, and the only way to increase exports to a significant level is to have the dollar continue dropping like a rock.
The problem that I see with this argument is that we're then relying on the world economy being able to afford to prop up our own. What happens if international economies are also dropping (the US housing market isn't the only one tanking), and everyone curtails their spending?
Then everyone is screwed.
Sometimes I fear we're heading for a perfect storm of... economic badness. The subprime fiasco, collapse of housing prices, skyrocketing energy costs, huge US budget and trade deficits and the resulting falling value of the dollar, consumers cutting their spending way back out of fear for their jobs....
I think you've forgotten the economic stimulus rebates coming in May. That should fix everything.
The chances of our housing collapse taking as long as the Japanese one is fairly small, our legal system allows for busted companies to be taken out back and metaphorically shot, while the Japanese legal system allowed the continuation of what was called zombie companies, companies that should no longer function but because of banks unwilling to call them in default continue to stagger along despite negative values, and interlocking stock trades between banks and businesses made them part owners of each other.
Which just means it will be all of the pain of the Japanese crisis concentrated into a much shorter period, how much longer depends on how much bad debt is really out there, whether or not Wall Street is willing to kick over the rocks to find them rather than pretend otherwise, and whether or not the Fed/Congress decide to do something other than bailouts...
I think you've forgotten the economic stimulus rebates coming in May. That should fix everything.
Yeah, forgot about that. Also forgot about Bush saying "The economy is structurally sound" or WTTE. Those in the reality-based community often forget that we now create our own reality (or so said the Bush administration guy)...
Also forgot about Bush saying "The economy is structurally sound"
Yeah exactly. Has the combination of Bush and Dick ever led us wrong?