View Full Version : The Great American Housing Nightmare: Next Phase

mick silver
4th November 2008, 21:53
One of the greatest blunders of our time is made by those who blindly assume home prices are so low they couldn't possibly go any lower.

In reality, home prices don't stop going down at some particular level that appears to be "cheap." Nor do they stop falling because they match some historical price that was previously a low.

The end of the decline in home prices will come only when there are no new economic forces driving them down.

When will that be? I'd love to say it's just around the corner. But everything I see tells me that, despite the sharp declines already recorded, a steeper plunge in home values is dead ahead.

The reason: So far, most of the troubles in the housing market have been caused by bad mortgages going sour. Meanwhile,


mick silver
4th November 2008, 21:59
Boom-Bust Element #3:
Government-Created Monopolies,
Corruption, Fraud and Cover-Ups

Some of the largest speculative bubbles of all time were born out of government-sponsored monopolies, nurtured by government-bred bureaucrats and kept alive beyond their time by government-inspired corruption, fraud and cover-ups.

In the South Sea Bubble of 1711, the English government needed to find a way to fund the huge debts it had incurred in the War of Spanish Succession. So the Lord Treasurer, Robert Harley, created the South Sea Trading company to help finance the government's debts. The company got exclusive trading rights in the South Atlantic plus a perpetual government annuity of over a half million pounds per year. In exchange, its investors agreed to assume responsibility for about 10 million of the government's debt.

It seemed like a win-win. But the government's sponsorship and the company's monopoly led to big trouble. The company's managers, thinking they had the government's largesse to fall back on, were complacent and ignored signs of economic troubles. They took excessive risk. And ultimately, investigations turned up massive fraud at the company and pervasive corruption in the government.

When the entire structure collapsed, there was nothing the government could do except to pass what later become known as the "Bubble Act" aimed to prevent a future recurrence.

It sounds like what going on now

mick silver
4th November 2008, 22:03
DAM good read i hope all read this