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What caused the past, and current housing bubbles

By tovarichpeter following x   2014 Jan 6, 10:18am 28,656 views   121 comments   watch   nsfw   quote     share    


http://www.cepr.net/index.php/blogs/beat-the-press/peter-wallisons-housing-bubble

Wallison wants to blame the bubble on government policy of promoting homeownership. There certainly has been a problem of a housing policy that is far too tilted toward homeownership, but this does not explain the bubble.

#housing

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82   hrhjuliet   ignore (0)   2014 Jan 10, 2:33pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Call it Crazy says

ELC says

What recession? As long as I can remember when I take a cruise the ship is full. Every restaurant I go to is packed. The mall is full of people buying crap. Most people are driving new cars. I hear we're in bad shape on the TV. On the Internet too. I just don't see it.

Thank God for plastic, sub-prime and cash out refi's....

Artificial propped up market, that's where I want to invest!

83   Bellingham Bill   ignore (5)   2014 Jan 12, 2:07am   ↑ like (0)   ↓ dislike (0)   quote   flag        

yes, velocity is correlated with inflation:

http://research.stlouisfed.org/fred2/graph/?g=qSQ

but:

http://research.stlouisfed.org/fred2/graph/?g=qSS

shows how money supply is growing faster than GDP now.

The Fed throws a dollar into the economy, and it functionally disappears somewhere.

sure not hitting wages:

http://research.stlouisfed.org/fred2/graph/?g=qST

no wage inflation, no inflation, just reallocation.

84   indigenous   ignore (0)   2014 Jan 12, 2:22am   ↑ like (1)   ↓ dislike (2)   quote   flag        

Bellingham Bill says

shows how money supply is growing faster than GDP now.

Is this a ticking time bomb?

Although we do see it in the high end of the market.

hrhjuliet says

sure not hitting wages:

To me this indicates mal-investment.

You are good with these graphs where did you learn how to use them?

85   Bellingham Bill   ignore (5)   2014 Jan 12, 3:30am   ↑ like (1)   ↓ dislike (0)   quote   flag        

The money supply is a ticking time bomb, maybe.

http://research.stlouisfed.org/fred2/graph/?g=qT1

is Japan's experience.

blue is M2, red is CPI, both 1955 = 100

shows their money has doubled since 1990 while the price level is up ~10% (lack of inflation is due to lack of population growth and the strengthening yen making imports cheaper and putting downward wage pressure on export jobs)

We're not Japan, so I don't know what's going to happen. But as long as the 1% keeps taking all the money:

http://research.stlouisfed.org/fred2/series/GINIALLRH

inflation is going to be hard to find IMO.

>You are good with these graphs where did you learn how to use them?

just screwing around on the FRED site over the years.

To make a new graph I just google "PAYEMS" which gets me to their graphing portal where I can search for what I want to see.

86   indigenous   ignore (0)   2014 Jan 12, 3:45am   ↑ like (0)   ↓ dislike (2)   quote   flag        

Bellingham Bill says

is Japan's experience.

I have read where Japan has made it's money is by manufacturing goods and buying commodities at lower prices. With the current devaluing of the Yen it has made the margin on this very thin.

Bellingham Bill says

To make a new graph I just google "PAYEMS" which gets me to their graphing portal where I can search for what I want to see.

Thanks

I'm thinking that the real cause of inflation is demographics, which rarely gets mentioned. But that is still a symptom because the money supply could simply be adjusted downward. But the entire economy is so leveraged that downward adjustment causes big problems so the FED cannot do this without creating these problems. Same reason China builds empty cities. But the reality is that it only exacerbates the problem.

87   New Renter   ignore (11)   2014 Jan 12, 4:41am   ↑ like (0)   ↓ dislike (0)   quote   flag        

sbh says

3. Deflationary depression: def. "an increase in standard of living"

You say that like its a bad thing.

88   indigenous   ignore (0)   2014 Jan 12, 4:56am   ↑ like (0)   ↓ dislike (2)   quote   flag        

sbh says

3. Deflationary depression: def. "an increase in standard of living"

I know this makes your head spin, I suppose because the worst time the United States endured was the great depression. But most depression occur with inflation. E.G. this economy is in a depression with inflation.

Just to be clear a depression:

Definition of 'Depression'

A severe and prolonged downturn in economic activity. In economics, a depression is commonly defined as an extreme recession that lasts two or more years. A depression is characterized by economic factors such as substantial increases in unemployment, a drop in available credit, diminishing output, bankruptcies and sovereign debt defaults, reduced trade and commerce, and sustained volatility in currency values. In times of depression, consumer confidence and investments decrease, causing the economy to shut down

As to the other you underestimate how hard it is to stay on top. And the greatest creator of inequality is inflation it helps the investor and hurts the worker. The most egregious in this regard is crony capitalism.

89   New Renter   ignore (11)   2014 Jan 12, 5:05am   ↑ like (0)   ↓ dislike (0)   quote   flag        

sbh says

New Renter says

sbh says

3. Deflationary depression: def. "an increase in standard of living"

You say that like its a bad thing.

Evidently there are no job losses in such a depression, just a tremendous strengthening of money (in the bread lines). The debt liquidation spiral is another myth, apparently, and we would have nothing to fear of the skyrocketing of real interest rates. But that's just that old pesky "number" thing the Austrians don't want to mess with. What could be more inconvenient than subtracting a negative number when measuring at all is frowned upon. I guess, when everyone's broke, it won't matter because supply will be infinite and price will be zero and everyone will have all they need, job or no.

So you prefer stagflation?

90   tatupu70   ignore (0)   2014 Jan 12, 5:12am   ↑ like (0)   ↓ dislike (0)   quote   flag        

indigenous says

But most depression occur with inflation. E.G. this economy is in a depression with inflation.

I can't tell if you're being serious or just trolling at this point. The definition you posted completely refutes everything you are saying.

91   tatupu70   ignore (0)   2014 Jan 12, 5:13am   ↑ like (0)   ↓ dislike (0)   quote   flag        

New Renter says

So you prefer stagflation?

So those are the only two choices? Depression or Stagflation?

I choose the third choice--slow growth with mild inflation.

92   indigenous   ignore (0)   2014 Jan 12, 5:20am   ↑ like (0)   ↓ dislike (2)   quote   flag        

tatupu70 says

The definition you posted completely refutes everything you are saying.

indigenous says

A depression is characterized by economic factors such as substantial increases in unemployment,

Yes

indigenous says

a drop in available credit

Yes

indigenous says

diminishing output

Yes but camouflaged by FED spending

indigenous says

bankruptcies and sovereign debt defaults

Yes in other countries but somewhat confused in this country because of the FED printing 6 trillion

indigenous says

consumer confidence and investments decrease

Yes but again camouflaged because of FED spending.

93   indigenous   ignore (0)   2014 Jan 12, 5:23am   ↑ like (0)   ↓ dislike (2)   quote   flag        

Bellingham Bill says

just screwing around on the FRED site over the years.

Do you know how to get a graph that shows the entire US private credit graph over a long period of time?

94   tatupu70   ignore (0)   2014 Jan 12, 5:26am   ↑ like (0)   ↓ dislike (0)   quote   flag        

indigenous says

indigenous says

A depression is characterized by economic factors such as substantial increases in unemployment,

Yes

Unemployment has been falling for at least 2-3 years.

indigenous says

indigenous says

diminishing output

Yes but camouflaged by FED spending

There are no "but"s. Output is either diminished, or it's not.

indigenous says

indigenous says

bankruptcies and sovereign debt defaults

Yes in other countries but somewhat confused in this country because of the FED printing 6 trillion

Again. There is no confused. It's either yes or no.indigenous says

indigenous says

consumer confidence and investments decrease

Yes but again camouflaged because of FED spending.

NO! The answer is NO.

It's unbelievable how you guys can rationalize being 100% completely wrong. And pretend like you are right.

I picked the Panthers today. I was 100% correct but it was camouflaged by the 2 TDs from Capernick.

95   indigenous   ignore (0)   2014 Jan 12, 5:30am   ↑ like (0)   ↓ dislike (2)   quote   flag        

tatupu70 says

It's unbelievable how you guys can rationalize being 100% completely wrong. And pretend like you are right.

I picked the Panthers today. I was 100% correct but it was camouflaged by the 2 TDs from Capernick.

One of your problems is that you conflate things. Football does not have any thing to do with economic depression.

Malinvestment absolutely gives the appearance that things are better. This is the same thing that Japan is doing and destroying the Japanese people's savings in the process.

96   tatupu70   ignore (0)   2014 Jan 12, 5:35am   ↑ like (0)   ↓ dislike (0)   quote   flag        

indigenous says

One of your problems is that you conflate things. Football does not have any thing to do with economic depression.

And you have a very difficult time with analogies. Obviously football has little to do with the economy. Wrong is wrong, however. Which is the point.

indigenous says

Malinvestment absolutely gives the appearance that things are better. This is the same thing that Japan is doing and destroying the Japanese people's savings in the process.

OK--give me a few examples of current "malinvestment". And how it's making the economy look better.

What specifically is Japan doing that is destroying people's savings?

97   tatupu70   ignore (0)   2014 Jan 12, 8:02am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Call it Crazy says

Hmmm... I wonder why that is???

Yep--labor force participation rate is part of it. As is job creation.

98   indigenous   ignore (0)   2014 Jan 12, 8:05am   ↑ like (1)   ↓ dislike (2)   quote   flag        

tatupu70 says

OK--give me a few examples of current "malinvestment". And how it's making the economy look better.

Overpriced houses, GM, Solyndra, TBTF banks and AIG

tatupu70 says

And how it's making the economy look better.

The price of housing, stocks, and treasuries are overvalued

tatupu70 says

What specifically is Japan doing that is destroying people's savings

Printing money out of thin air.

Call it Crazy says

tatupu70 says

Unemployment has been falling for at least 2-3 years.

Hmmm... I wonder why that is???

Oh come on CIC haven't you been listening it is caused by inequality...

99   thomaswong.1986   ignore (5)   2014 Jan 12, 2:14pm   ↑ like (0)   ↓ dislike (1)   quote   flag        

tatupu70 says

OK--I'll actually agree that GM, AIG and the TBTF banks could be considered malinvestment. Houses and Solyndra are not. Bailouts are often poor investments.

Stupid Liberal to the core... to say "Housing and Solyndra are not malinvestments"..

LOL! how stupid...

100   tatupu70   ignore (0)   2014 Jan 12, 8:08pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

thomaswong.1986 says

Stupid Liberal to the core... to say "Housing and Solyndra are not
malinvestments"..


LOL! how stupid...

They are not. Look up the definition of malinvestment and get back with me.

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