In my humble opinion you are incorrect. The economy could have handled the housing situation as it has in the past. The problem is wall street and the congress collusion and what was done with the mortgages. Of course these are the people that will solve the situation for us. The most responsible for the situation will probably get Medals from the gummint for their service to the country. Kinda like medals and bonuses for Govt department heads. WHO DID TERRIBLE JOBS!
Yes, that's what salespeople do. They sell and that's what banks do, they lend. If banks are able to get cheap money for several years and that cheap money is borrowed and used to speculate on a realestate market that keeps going up and up and up............you create a bubble. When that bubble bursts, you have problems. This economy expanded artificially through cheap creadit. If you look at that credit expansion, as a rubber band, that has now exhuasted it's course, now it's time for the snap back. Less spending, which equals pain for the economy.
Why were the able to write these loans Because the loans were always able to be dumped on fannie/freddie Why were the able to gather up to 60% of the market because they were implicitly backed by the government Fannie and freddie collapsed yet there was a government office with 200 regulators If no government backing existed there would be no buyer of last resort Free markets are self correcting but that does not mean there is no pain. The winners are sorted from the losers People and companies who make bad decesions will fail. The market learns a lesson When government distorts the natural market mechanisms you create greater problem and you still get the collapse. But now winners are punished along with the losers
No its just as the book says. The government causes the problems and then makes them worst by repeating what they did to mess things up to begin with. How can you not see this simple truth?
You should ask that question from Alan Greenspan, who says he was most influenced by Ayn Rand's Atlas Shrugged: Watch 4:40 - 8:00 http://video.google.com/videoplay?d...DeBoSY_HH6O6qAOCqMXFDA&q=alan+greenspan&hl=en
Fannie and Freddie had a leverage of 160. Thats kind of significant for a government backed entity right?
ummm, but her fans are wrecking havoc in the world. Wouldn't a rational person attribute that to the underlying movement?
One could argue rand contributed to the crisis because greenspan was an objectivisit and he opposed regulation. Yet fraud is one of the most recurring themes of bubbles from tulips to tech stocks, so by definition the law doesn't matter