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my questions (Read 8519 times)
Maqqa
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14% - that low?!

Posts: 16000
Re: my questions
Reply #15 - Jun 15th, 2011 at 6:48pm
 
BobH wrote on Aug 16th, 2010 at 4:12am:
freediver wrote on Aug 8th, 2010 at 10:14pm:
We didn't have economic central planning leading up to the GFC. We did have the reserve bank pushing interest rates up. In your opinion, what would have happened to the housing bubble if the reserve bank had not been pushing up interest rates?

The U.S. Federal Reserve is obviously not blameless in the lead-up to the GFC. It kept interest rates low for years, which undoubtably led to an increased demand for housing. Because low interest rates mean lower mortgage repayments. But that's not why the housing bubble bursted. Increased demand for housing doesn't have to mean high housing prices. In places where supply was free to rise with demand, there were more houses but housing prices remained fairly steady. The problem was in places where supply was artificially restricted. That's what led to the boom in housing prices and that's why there weren't housing bubbles everywhere. Look at coastal California where there were and are severe housing restrictions and where there were also skyrocketing housing pricing leading up to the big bust that caused the GFC. So central planners with their building restrictions caused housing prices to skyrocket. Not so much interest rates, although they played a part in effecting demand. But it was the supply side that was corrupted by central planning and that's why there was a big housing boom and bust.



So huge gaps there Bob

While I understand the affordability argument - but in this case it's not correct.

Corporate Governance was much to blame which they tried to fix with Sarbane-Oxley in 2002 - yes I know the poo didn't hit the fan until 2008 but this is a decades in the making

and also Clinton's promise of everyone should be able to buy a house didn't help either
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Bill 14% is not the alcohol content of that wine. It's your poll number
 
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