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The housing bubble was not driven by market forces. It was driven by central planners by incentivising mortgage companies to lend recklessly, as these companie

by jazzyk 11y ago

The housing bubble was not driven by market forces. It was driven by central planners by incentivising mortgage companies to lend recklessly, as these companies knew the mortgages were guaranteed by quasi-governmental companies like Fannie Mae and Freddie Mac which currently hold ~87% of all mortgages [1]. No wonder the Fed is so keen on pumping up housing prices (through too-low interest rates) [1] http://www.nytimes.com/interactive/2013/08/06/business/helping-housing.html?_r=0 http://www.nytimes.com/interactive/2013/08/06/business/helpi...

leereeves 11y ago
That link shows that the "share of mortgages backed by the government" dropped during the bubble and fell as low as (about) 38%, and it didn't increase until after housing prices peaked. I think you've misinterpreted the statistic you quoted. During the bubble, lenders found easy money for mortgages from private markets, and it was after the bubble ended that the government stepped in to prop up prices.
woodandsteel 11y ago
I have a couple of questions for you. But first, when the bubble was happening, conservatives said that prices were sound, would never crash, and this was because they were the product of market forces. But then the bubble burst, and overnight conservatives switched to saying it had all been unsound because of government intervention. So let me ask you, what was your position when the bubble was happening, and how did you respond when conservatives suddenly changed their story?
- jazzyk 11y ago
  Why do you bring politics into this? This was neither conservative nor liberal bubble. Both sides are guilty, this is central planners vs the market. I saw the bubble for what it was, most of my friends looked at me strangely, thinking I was probably jealous, because I was not interested in buying a $2M shack masquerading as a house.

by jazzyk 11y ago

leereeves 11y ago

That link shows that the "share of mortgages backed by the government" dropped during the bubble and fell as low as (about) 38%, and it didn't increase until after housing prices peaked. I think you've misinterpreted the statistic you quoted. During the bubble, lenders found easy money for mortgages from private markets, and it was after the bubble ended that the government stepped in to prop up prices.

woodandsteel 11y ago

I have a couple of questions for you. But first, when the bubble was happening, conservatives said that prices were sound, would never crash, and this was because they were the product of market forces. But then the bubble burst, and overnight conservatives switched to saying it had all been unsound because of government intervention. So let me ask you, what was your position when the bubble was happening, and how did you respond when conservatives suddenly changed their story?

jazzyk 11y ago
Why do you bring politics into this? This was neither conservative nor liberal bubble. Both sides are guilty, this is central planners vs the market. I saw the bubble for what it was, most of my friends looked at me strangely, thinking I was probably jealous, because I was not interested in buying a $2M shack masquerading as a house.