Uncontrolled inflation of the market, caused in large part by “easy” credit with “flexible” mortgages that included huge balloon payments, or increasing interest rates is what equaled “deflation” and repossessions. Not that complex, and definitely Bush- and his predecessors.
A fractional-reserve-banking/money creation system REQUIRES an asset bubble of one kind or another about every 8-12 years.
The most recent bubble — housing—created the illusion of a sound economy during the 00s…as people pulled an annual average of about $1 TRILLION out of home equity loans or refinancing of their mortgages (Roubini). One trillion per year in a $13-14 Trillion economy is nearly 7%. Pull out that driving force in the economy and of course the economy is going to plummet.
“The cost of housing needs to drop down within the 3x range before we have a sound economy.”
I’m all for that! But what kind of magic spell do we need to make that happen? And how do you make people listen to reason? Wait, I mean, how do you make corporations and greedy banks/mortgage companies listen to reason?
ComicsStudies almost 14 years ago
I think you meant “Bush.”
Dtroutma almost 14 years ago
Uncontrolled inflation of the market, caused in large part by “easy” credit with “flexible” mortgages that included huge balloon payments, or increasing interest rates is what equaled “deflation” and repossessions. Not that complex, and definitely Bush- and his predecessors.
myming almost 14 years ago
ok, the house that bush built w/ automatic depreciation built in…
WarBush almost 14 years ago
^I’ve been saying that for a while. Where have you been?
vhammon almost 14 years ago
A fractional-reserve-banking/money creation system REQUIRES an asset bubble of one kind or another about every 8-12 years.
The most recent bubble — housing—created the illusion of a sound economy during the 00s…as people pulled an annual average of about $1 TRILLION out of home equity loans or refinancing of their mortgages (Roubini). One trillion per year in a $13-14 Trillion economy is nearly 7%. Pull out that driving force in the economy and of course the economy is going to plummet.
vhammon almost 14 years ago
Over most of the 20th century, the median home price was roughly 3 times median annual income. Beginning in the 1980s that ratio began to go up.
By 2005, in some areas, the cost of housing was up to 10 times annual incomes and people were buying into houses they really couldn’t afford.
The cost of housing needs to drop down within the 3x range before we have a sound economy.
Tsigili almost 14 years ago
“The cost of housing needs to drop down within the 3x range before we have a sound economy.”
I’m all for that! But what kind of magic spell do we need to make that happen? And how do you make people listen to reason? Wait, I mean, how do you make corporations and greedy banks/mortgage companies listen to reason?
WarBush almost 14 years ago
“A fractional-reserve-banking/money creation system REQUIRES an asset bubble of one kind or another about every 8-12 years.”
Its called debt. Doesn’t matter if its credit or home it all leads to it.