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Land of Freedom
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What caused the housing bubble and bust in 2008?
May 19th, 2019 at 2:13pm
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What caused the housing bubble and bust in 2008?
  

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kaz
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Re: What caused the housing bubble and bust in 2008?
Reply #1 - May 19th, 2019 at 3:36pm
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Land of Freedom wrote on May 19th, 2019 at 2:13pm:
What caused the housing bubble and bust in 2008?


It started with Clinton.  He had a policy that everyone should be able to own a home whether they are a good risk or not.  So he pressured the banks to lower their lending standards by threatening to haul them in front of congress and publicly lynch them if they didn't.  He also funded it with unlimited free money from the Fed.

W came in and said wow, that's a bad idea and it's not going to end well.  Then in typical Republican fashion, rather than doing anything to fix it, he expanded Clinton's policy.

When the economy tightened and the people who bought homes they couldn't afford started to lose their jobs, the bubble burst.

And now you know ... the rest of the story ...
  

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Re: What caused the housing bubble and bust in 2008?
Reply #2 - May 19th, 2019 at 4:25pm
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• prices on mortgage-backed securities plunged, resulting in large losses for lenders

• Lehman Brothers Chapter 11 (bankruptcy) cause a panic credit freeze.  Huge recession ensued.

• Government stepped in to bail out "too big to fail" banks using taxpayer money resulting in huge loss of confidence.

• "Quantitative Easing" implemented in November of 2008.  The large cash-dump caused instant inflation which signigicantly lowered the purchasing power of the US dollar, furthering the loss of confidence.

• Fed attempted to grow its balance sheet by purchasing government bonds and mortgage-backed securities.

What a colossal mess!!     It's a miracle that these nincompoops didn't collapse the whole economy!!   Grin

Their next fukc-up will, though.    It's a good idea to diversify your assets with precious metals.  Precious metals are immune to all this crazy Keynesian nonsense!   Smiley
  
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kaz
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Re: What caused the housing bubble and bust in 2008?
Reply #3 - May 19th, 2019 at 11:02pm
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SkyChief wrote on May 19th, 2019 at 4:25pm:
• prices on mortgage-backed securities plunged, resulting in large losses for lenders

• Lehman Brothers Chapter 11 (bankruptcy) cause a panic credit freeze.  Huge recession ensued.

• Government stepped in to bail out "too big to fail" banks using taxpayer money resulting in huge loss of confidence.

• "Quantitative Easing" implemented in November of 2008.  The large cash-dump caused instant inflation which signigicantly lowered the purchasing power of the US dollar, furthering the loss of confidence.

• Fed attempted to grow its balance sheet by purchasing government bonds and mortgage-backed securities.

What a colossal mess!!     It's a miracle that these nincompoops didn't collapse the whole economy!!   Grin

Their next fukc-up will, though.    It's a good idea to diversify your assets with precious metals.  Precious metals are immune to all this crazy Keynesian nonsense!   Smiley


Fair enough.  All true.  But you're talking about the proximate events and I'm talking about the root causes
  

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Jeff
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Re: What caused the housing bubble and bust in 2008?
Reply #4 - May 20th, 2019 at 8:14am
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kaz wrote on May 19th, 2019 at 11:02pm:
Fair enough.  All true.  But you're talking about the proximate events and I'm talking about the root causes
Real root causes go back to the creation of the Fed and the abandonment of real money. Glass-Steagall and the SEC's Rule 415 helped too.
  
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BobK71
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Re: What caused the housing bubble and bust in 2008?
Reply #5 - May 20th, 2019 at 8:40am
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2008 was just another one of those...

Here's my take on the fundamental cause.

With this executive summary: The elites use state power to prop up the value of money, debt, and other financial assets artificially, to benefit those who issue them, i.e. themselves.  When some over-valued asset eventually must crash, the entire economy suffers the loss of jobs, business and savings.
  
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kaz
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Re: What caused the housing bubble and bust in 2008?
Reply #6 - May 20th, 2019 at 8:50am
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BobK71 wrote on May 20th, 2019 at 8:40am:
2008 was just another one of those...

Here's my take on the fundamental cause.

With this executive summary: The elites use state power to prop up the value of money, debt, and other financial assets artificially, to benefit those who issue them, i.e. themselves.  When some over-valued asset eventually must crash, the entire economy suffers the loss of jobs, business and savings.


Maybe you could be a little more specific
  

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EWS
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Re: What caused the housing bubble and bust in 2008?
Reply #7 - May 20th, 2019 at 2:21pm
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As others said before, Clinton's lefty politics forcing banks to lower lending standards, and banks lending people more than they could reasonably afford. More of that wonderful practice in D.C. of kicking the can down the road.

I know where i was living at the time new home construction was THE main industry before the crash. There were thousands of contractors in a valley with a population of approx 100k, and they were all making bank and spending money like it was going out of style.  Then when the bottom dropped out, well it was scary how fast almost 5000 homes hit the market, most of them unfinished. 

My Dad was a job site superintendent building multi million dollar vacation homes. The owner of the project he was on at the time called him one night and told him to shut down the job effective immediately. Took almost a year to get the guy to pay my dad as well as the contractors what he owed them, and then the guy had the balls to call my dad up a few years later and ask him to finish the job LOL.
  
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Re: What caused the housing bubble and bust in 2008?
Reply #8 - May 20th, 2019 at 3:52pm
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We are releasing a film on just that question on June 26!  I drove over 35,000 miles interview people who predicted the crash and asked them why it happened.

The world premiere of our film The Housing Bubble earned an Audience Award at the Anthem Film Festival when over 300 people showed up for the screening.  Legendary investors Jim Rogers, Marc Faber, Doug Casey, and Peter Schiff star in the film alongside economists Joseph Salerno, Ron Paul, Robert Murphy, Jeff Herbener, Mark Thornton, Roger Garrison, and Patrick Barron.  Financial writers Jim Grant, David Stockman, and Gene Epstein also join the cast.  David Tice is an Executive Producer.  Naomi Brockwell narrates the film and is also a producer.  Tom Woods co-wrote the film with me.


The Housing Bubble will be released June 26th during our NYC premiere at the Angelika Film Center, the legendary indie theater that has hosted Oscar winning directors Sofia Coppola, Casey Affleck, & Barry Jenkins, as well as actors like Rami Malek, Sam Elliott, & Tom Hiddleston.  Our panel will include Tom Woods, Jim Grant, Peter Schiff, Gene Epstein, David Tice, and myself.  Despite not yet being released, the film has been seen in 37 states and 19 countries, including events at Hillsdale College, Mises Canada, Mises Poland, Mises Estonia, the Lithuanian Free Market Institute, Freedom Fest, Mises University, Anarchapulco, and the Mercatus Center.

www.thebubblefilms.com
https://letusdisagree.com/nyc/
Wednesday - June 26 - 6:30 pm
Panel:
Tom Woods, James Grant,
Peter Schiff, Gene Epstein,
David Tice, Jimmy Morrison
  
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kaz
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Re: What caused the housing bubble and bust in 2008?
Reply #9 - May 20th, 2019 at 4:21pm
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EWS wrote on May 20th, 2019 at 2:21pm:
As others said before, Clinton's lefty politics forcing banks to lower lending standards, and banks lending people more than they could reasonably afford


Yes, but don't forget to give W the assist by calling it out as a bad policy, then expanding it
  

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