Saturday, August 11, 2007

Housing Market Bubble

If you've been watching the wild oscillations of the stock market these past few weeks, you know that something is not quite right. Many people are not aware that virtually all of this recent volatility relates to the housing market bubble, which was allowed to inflate beyond reason over the past few years. The fault for this lies mainly with a Republican congress and the shameful policies of the Bush administration.

But the news media also comes in for some serious criticism. The media actively enabled the bubble, serving as a loudspeaker for the paid shills of the National Association of Realtors, the Mortgage Bankers Association, and the National Association of Homebuilders. Their talking points were all too often presented as the unbiased estimates of "experts", while academics were given short shrift.

Dean Baker of the Center for Economic Policy Research has a great paper (warning, pdf) illustrating some aspects of this mess.

For a much deeper understanding of the fundamental problems we will be facing over the next few years due to an unprecedented credit bubble, see Calculated Risk, my go-to source for thoughtful analysis on the housing and related economic issues.

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