4 thoughts on “Reliving The 2008 Financial Crisis”

  1. That is a good attempt at explaining the Great Recession. All true, but remiss in not mentioning that what enabled such a massive misallocation of $ was the Fed creating money ex nihilo to artificially lower interest rates.

    The US economy is a million miles from being free market, some of which he spells out. And yet all of the harms inflicted by govt intervention are ever blamed on the free market. Government schools have achieved one of their purposes: Americans don’t realize they live in a socialist/fascist/corporatist economic system, with government’s tentacles penetrating into every interstitial space.

    1. That second paragraph of your comment is particularly insightful, J. Sobran. Government reminds me of a golf tournament– it consists of frequent efforts to remedy previous errors, often with additional errors.

  2. It all started with banks taking mortgages on home buyers who couldn’t otherwise pay the obligation.

    For over a century, state and federal governments worked to racially segregate American neighborhoods, promoting homeownership for whites while denying it for African-Americans. The result is that decades after discriminatory treatment in housing was outlawed, the homeownership gap between minorities and whites remains large.

    From the 1990s to the 2000s, both political parties bent the federal mortgage agencies to their will, continually relaxing underwriting standards to promote homeownership. Along with historically low interest rates, this led to an explosion in subprime lending, which fueled the housing bubble and spread toxic mortgages throughout the financial system.

    This condition motivated many well-meaning activists to pressure government housing authorities to expand homeownership opportunities to minority and low-income residents. The left saw this as a way to reduce discrimination and marginalization, solving the problems of past racism. The right saw it as a way to build an “ownership society” and give low-income earners a stake in the American dream, an anti-communist tactic first envisioned by Woodrow Wilson.

    I bought a home in 1983 wherein I paid only interest and nothing toward equity. It was a 30 year term. After a few years a friend who was a banker offered me a 15 year mortgage where the interest and equity was fairly split. I accepted her bank deal and in 15 years the loan was totally repaid.

    Yes, J. Sobran, it was a good attempt at explaining the Great Recession.

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