All Posts Tagged With: "housing bubble"
Blowing Bubbles: Getting Ready for the Next Bust
Imagine you are a private in the army. Your sergeant orders you to dig a hole. When you finish, the sergeant is horrified to find that you have dug a hole. He dresses you down and then orders you to dig another hole. Insane? Welcome to today’s world of American banking. Over the course of [...]
4Jan2012 | Richard W. Fulmer | 16 comments | ContinuedFreefall: America, Free Markets, and the Sinking of the World Economy
In 2001 Joseph Stiglitz was co-recipient of the Nobel Prize in economics, a fact prominently noted on the dust jacket of Freefall, his book on the financial crisis. In 2002 Stiglitz and two coauthors produced a report, commissioned and published by the government-sponsored housing agency Fannie Mae, stating that the risk of a failure by [...]
4Jan2012 | Lawrence H. White | 2 comments | ContinuedDestroying Value
In Cleveland and other American cities homes are being demolished because five years after the housing bust there is nothing better to do with them. Therein lies a lesson in Austrian business cycle theory. In a world of uncertainty, waste—the destruction of value—is inevitable. Human action, which aims to replace inferior circumstances with superior circumstances, [...]
4Jan2012 | Sheldon Richman | 2 comments | ContinuedDestroying Value
It’s sad enough that we waste precious resources and labor because we are fallible. It’s so much sadder when this happens because government policies lead rational people to make stupid decisions.
14Oct2011 | Sheldon Richman | 18 comments | ContinuedIt Takes a Government to Inflate a Housing Bubble
If you want to fully appreciate government’s responsibility for the housing bubble and ensuing financial meltdown, see this article by Peter Wallison. Choice quote: Beginning in 1992, the government required Fannie Mae and Freddie Mac to direct a substantial portion of their mortgage financing to borrowers who were at or below the median income in [...]
12Oct2011 | Sheldon Richman | 1 comment | ContinuedGetting Off Track: How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis and The Housing Boom and Bust
These two books are must-reads for anyone wanting to have a working understanding of the economic and financial crisis. They complement each other and together form a civics lesson for an informed electorate. Economists are prone to write turgid prose and employ a jargon-filled style. Not these two gems. Each author is a deservedly well-regarded [...]
22Sep2010 | Gerald P. O'Driscoll, Jr. | 2 comments | ContinuedLegends of the Fall: The Real and Imagined Sources of Our Bubble Economy
Preface The Foundation for Economic Education is pleased to announce that Richard W. Fulmer of Humble, Texas, is the winner of the second annual Eugene S. Thorpe writing competition. Mr. Fulmer holds a bachelor’s degree in mechanical engineering from New Mexico State University and for over 20 years has worked as a systems analyst in [...]
24Mar2010 | Richard W. Fulmer | 13 comments | ContinuedStop Insuring Mortgages
The Federal Housing Administration (FHA) announced last December that it wants tougher rules on mortgage lenders. Maybe FHA got spooked by a New York Times story in November titled “Easy Loans to Wealthier Areas,” which said: “In its efforts to prop up a shattered housing market, the government is greatly extending its traditional support of [...]
24Feb2010 | John Stossel | 4 comments | ContinuedBoom and Bust: Crisis and Response
America has experienced a classic economic boom and bust, which I first chronicled in the November 2007 Freeman. Ill-conceived policies to encourage homeownership channeled cheap credit into housing markets. Land-use and zoning policies restricted the supply of housing in key desirable markets. In The Housing Boom and Bust, Thomas Sowell of the Hoover Institution has [...]
24Feb2010 | Gerald P. O'Driscoll, Jr. | 2 comments | ContinuedA Failure of Capitalism: The Crisis of ’08 and the Descent into Depression
Richard Posner’s latest book belongs to the fast-expanding cottage industry of financial crisis books. A federal judge with a grounding in economics, Posner would seem to be an ideal person to tackle this complicated subject. Alas, he provides neither fresh material nor an interesting perspective. Posner describes well-known events—the failure of investment banks Bear Stearns [...]
5Jan2010 | Chidem Kurdas | 1 comment | ContinuedBoom and Bust: Crisis and Response
Gerald P. O’Driscoll’s TheFreemanOnline.org guest column is here.
23Nov2009 | Sheldon Richman | 0 comments | ContinuedBoom and Bust: Crisis and Response
America has experienced a classic economic boom and bust, which I first chronicled in “Subprime Monetary Policy,” The Freeman, November 2007, and then updated in the Wall Street Journal and elsewhere throughout 2008 and 2009. Stanford Professor John B. Taylor has now written a short, accessible book on the Fed’s easy-money policy: Getting Off Track: [...]
23Nov2009 | Gerald P. O'Driscoll, Jr. | 6 comments | ContinuedMore Fun with Fannie and Freddie
From today’s Wall Street Journal editorial page: Back when the housing mania was taking off, Massachusetts Congressman Barney Frank famously said he wanted Fannie Mae and Freddie Mac to “roll the dice” in the name of affordable housing. That didn’t turn out so well, but Mr. Frank has since only accumulated more power. And now [...]
24Jun2009 | Sheldon Richman | 0 comments | ContinuedCapital Letters
Is Greenspan Really Innocent of Causing the Housing Boom? David Henderson and Jeff Hummel have written a remarkably pro-Greenspan article, “Was Money Really Easy Under Greenspan?” (www.tinyurl.com/cuf3ug). The authors overlooked several points that would undermine their portrayal of Fed chairman Alan Greenspan as an anti-inflationist and the best Fed chairman ever. (Better than Paul Volcker?) [...]
21May2009 | mnolan | 0 comments | ContinuedThe Dynamics of Disintervention
1) government interventions into the market process tend systematically to generate unintended consequences; 2) many of these unintended consequences frustrate the announced goals of those who support the interventions; 3) the response to these frustrated intentions tends strongly in the direction of further intervention; 4) the economic system performs less effectively in coordinating the plans of buyers and sellers as it becomes burdened with the cumulative effects of an increasingly chaotic mix of interventions; and 5) the process comes to an end when these cumulative effects result in a major system-wide crisis and public choosers decide to reject interventionism in favor either of comprehensive planning or radically freer markets.
21May2009 | Sandy Ikeda | 3 comments | ContinuedGeithner Says Money Was Too Loose
From today’s Wall Street Journal editorial page (subscription site), re Treasury Secretary Timothy Geithner’s appearance on Charlie Rose last week. Asked about mistakes that brought on the economic turmoil, Geithner said in part: Mr. Geithner: “… [M]onetary policy around the world was too loose too long. And that created this just huge boom in asset [...]
12May2009 | Sheldon Richman | 0 comments | ContinuedU.S. Housing/Finance Policy
From the ridiculous to the subprime.
4May2009 | Sheldon Richman | 0 comments | Continued-
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