Skip to comments.Why Herman Cain (and Almost Everyone Else) Missed the Housing Bubble
Posted on 10/17/2011 9:59:53 PM PDT by neverdem
Now that Herman Cain has become a top-tier presidential candidate for the Republican nomination, he is receiving a greater degree of scrutiny than ever before. And that includes efforts by the mainstream media to do what they do best to conservative candidates: prove somehow that said candidates are unfit to serve.
First it was MSNBC's Lawrence O'Donnell playing the role of the white liberal lecturing Herman Cain on what it means to be black. Now it's Chuck Todd wondering what did Cain know and when did he know it...about housing bubbles.
During an October 11 interview (minute 4:58) on MSNBC, Chuck Todd said to Cain:
This is something you wrote in 2005, saying, arguing that there was no housing bubble. You wrote this in 2005, in Business and Media Institute, you said, "Coverage of the Bush economy reads like a collection of Democratic Party press releases, calling a strong economy everything from struggling to volatile or dicey. That kind of ignorance makes homeowners fear that their most expensive possession could turn worthless overnight. That won't happen."
Cain said he didn't know "just how bad Fannie Mae and Freddie Mac had distorted the housing market."
The implication is that Herman Cain is not fit to lead America into economic recovery because he didn't see the bubble before it burst. But if failing to recognize the housing bubble and its causes is a disqualifier, then virtually all presidential candidates would be ineligible, including President Obama.
The housing bubble was real, as the figure below of select housing markets illustrates...
(Excerpt) Read more at americanthinker.com ...
Real estate was not his area of education. Hell 95% of the so called real estate professionals, plus, developers and bankers thought the supply of people that could buy a 300000 house was unlimited and that a year later they would have an unlimited supple of buyers for a 350,000 homes. Pure ignorance of the market.
Virtually? How about all of them except Ron Paul?
I'd prefer Paul for president, but I believe I could settle for Cain.
The writer is RACIST
You can’t afford $32.00/hour workers on a $65,000.00 house. Bubble solved.
were profiting from the bubble, and not about to blow the whistle...
Even Keynesians like Krugman knew what was up, he just didn't appreciate the damage that would be wrought, "economic policy should encourage other spending to offset the temporary slump in business investment. Low interest rates, which promote spending on housing and other durable goods, are the main answer."
Now his 'main answer' is the threat of alien invasion to spur government expenditure. I wish I was kidding.
No one did except for Chris Dodd and Barneys Frank.
Herman Cain didn’t put the arm on lenders to fork over forty and fifty year no-money-down loans of a half a million dollars for McMansions in the DC suburbs to government clerks and secretaries, who augmented their “found” money with a flat screen TV and BMW and a Hummer in the driveway.
No, that was the Democrats.
Real estate is not my area of education either but I predicted the future Real Estate Bubble disaster on Free Republic back in 2005.
"Three million home owners with ARM loans just got a BIG surprise in the mail." ...... That's nothing compared to the orchietomies that those who have stretched their budgets to buy over-priced real estate with Interest Only loans will get when the "interest only" grace period expires. ..... 34 posted on Sunday, November 20, 2005 2:49:56 PM by Polybius
All it took to see the obvious Bubble was common sense. Common sense, however, appears to be in very short supply nowadays.
The Fed Charimain, Bernanke MISSED IT (he has 1000 economists working for him)
The Treasury Secretary Paulson MISSED IT
Ex Fed Chair Greenspan MISSED IT
Hundreds of so called expert economists MISSED IT...
The statements about Cain make no sense...unless one is a PTard..
According to that graph, the worst of the bubble hadn’t yet happened in 2005.
"We didn't truly know the dangers of the market, because it was a dark market," says Brooksley Born, the head of an obscure federal regulatory agency -- the Commodity Futures Trading Commission [CFTC] -- who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country's key economic powerbrokers to take actions that could have helped avert the crisis. "They were totally opposed to it," Born says. "That puzzled me. What was it that was in this market that had to be hidden?"
Go back and ask Barney Frank what HE knew about the bubble. Dodd? Reid? Pelosi? Paulsen? Geithner? Bernanke? Obama? Ferris Bueller? Anyone?
One common thread among all bubbles is...not a single major bubble burst could be predicted precisely. The reason for this is that bubbles can grow to extremes, beyond logical and rational valuations.
Housing bubble did not deviate the rule!
Indeed. Even here on FR it was debated with pro and con arguments for the housing bubble. Even the derivatives and the alphabet soup of financial products created were not known even to people.
Hindsight is 20/20 and it is good to see all stripes of conservative realize what monsters Freddie and Fannie are and how things like the Community Investment Act and a tootless SEC can add up to a disaster. The question is once we take the Senate (and hopefully) the White House will we do anything about it.
These debates are pointless. They should have one on ones or allow them all to give policy speeches alone. Having a nine person debate with time for youtube/twitter questions and silly questions (who on the stage would be your running mate?) don’t do anyone favors.
I digress. All I’m saying is I want hearings and one guy I credit for living up to the hype is Issa. I want him to go after Dodd, Reid, Pelosi (also for wasting money on her own airforce one with booze included), Paulsen, Geithner, Bernanke, Obama, etc. etc.
The housing bubble in those cities used in this article was not caused by "land use regulations" Those cities are the same ones where a huge influx of illegal aliens with huge instantaneous housing needs were issued the no docs, no down payment, no income required subprime mortgages that were certain to go into default.
Those mortgages and their attendant bundling into derivatives created a mortgage Ponzi scheme that was guaranteed to fail. And when it did, it brought down the financial house of cards, causing banks to fail and otherwise good mortgages to go under water as housing values collapsed.
Here is a more detailed article that appeared in Human Events in 2009.
Missing hyper link - it’s here http://www.humanevents.com/article.php?id=33821
Wow... we (the commercial insurance agency I worked for) were stressing about the upcoming ‘housing bubble’ back in 2005-2006 as it would surely affect our interest in the thousands (hundreds of?) dollars in commission lost if and when our mega-builders that were our clients hit the bubble pop.
Why did no one else see it?
In 2001 my husband and I were looking to buy a house. Our real estate agent took our financial information and told us that we could afford an amount twice as much as we knew we could afford. She kept trying to sell us the pricier houses while we finally fell in love with a townhouse that fit perfectly into our budget. We bought the townhouse. What saved us from the bubble was refusing to be seduced into buying a house we knew we couldn’t afford. We did get the house with no money down, though.