[djf]

It’s bullshit to think that government policies caused this.

The banks are able to effectively dictate the cost of real estate based on the amount that they are willing to loan.

And as long as they were able to loan more and more, and the apparent value kept rising, it was a win-win proposition for all involved.

So, now that the values are vastly overstated, and the incomes are realized to be way too insufficient, and the risks have been pawned off to hedge funds, equities purchased by the Europeans, and small company retirement benefits packages, you think it’s the governments fault?

[NVDave]

The government sets the lending standards and the banking regulations.

They deliberately loosened these standards and regulations in the second Clinton administration in order to increase the numbers of poor & minority people in their own homes. There was pressure on Fannie/Freddie to lower their portfolio standards. In fact, the Democrats’ obsession with “making housing affordable” led to the creation of Fannie/Freddie and the use of these two GSE’s as plum political appointments for their connected people in the banking system.

Yes, the government has a portion of the blame in this, as do the banks, the borrowers and the mortgage brokers.

[JasonC]

They are all to blame. The Fed was too loose for too long, panicking over the stock market crash and early WoT. The banks lent recklessly, and the Wall Street masters of the universe threw out decades of sound finance for their spreadsheet innovations. Foreign mercantilists goosed trade by buying reams of USTs and kept out long rates low, doing so. They also refuse to let their developing peoples consume as their incomes have risen. US households aren't saving, and instead are irresponsible with debt.

Every single link goes wonky, and it all goes comprehensively smash, and they are all to blame, and we will all pay. Blame is so irrelevant anyway.

The one item in the article that is Stalinist-surreal, is the developing world saving 33% of income - while the richest on earth, like us, save nothing. It is utterly crazy to have that division, and it cannot possibly last.

The other item that stood out is the claim that long rates being so low are a proof that investment can't keep up with savings desires. This is manifest nonsense. Savings are due to desire in places like China, they are policy. And long rates are low because every central bank on earth is inflationist. If low rates really reflected low demand, then gold and oil prices would be weak, not galloping. Low rates reflect a uniform policy of excessive looseness by all central banks, together.

The normal check on one country being too loose is that its currency weakens. But when everybody does it, commodity prices soar instead.