Upside Down Mortgage

Archive for the ‘Housing Bubble’ Category

Housing Bubble In China

Question: How can it be so many things are going wrong with the american economy?

clearly there is more at stake here than just economic cycles. So I am interested in hearing some of you point the finger as to who is to blame for what is going on. I will now list some of things in question: record budget deficits, record trade deficits, jobs being outsourced to china and india etc..., record consistently high gas prices, declining real wages of americans, the declining middle class, unaffordably expensive health care, rising inflation, the housing bubble bursting, record foreclosures, etc.....well you get the idea.

So again, my question is...how did we get here and who did it? (again, we know this is not just the cycle of the economy)

Answer: Wise men long ago figured out that capitalism, with no anti-,monopoly and anti-trust oversight and with no monitoring and correcting of trade deficits, works about as well as football with no rules would.
Ronald Reagan and the Bush cabal somehow managed to convince large numbers of people that being smart was bad. The resulting economic deregulation that they imposed in the absence of thoughtful oversight by the population and Congress has led to disaster, just as it did in the 80's and in the 20's Tax breaks have been given to multinational corporations, who do not, as theorized, reinvest in the economy. The money flows right out of the country, along with the oil money and the fortune that we've squandered in Iraq, almost none of it being used domestically to support the war , as has been the case in past wartimes, with manufacturing and other jobs. A lack of intelligent planning and oversight has led to Toll brothers and other mass producers of housing to flood the market, effectively killing the market for existing home sales, houses being the major equity holding of most American households.
And we still allow those same corporations to decide who our leaders will be, through campaign financing and through their control of major media, with the result being just what you might imagine; that the elected politicians are more beholden to them than to us.
Your country has been sold.

Gold, The Fed, China & My 1st Live Broadcast!- Part 3

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Housing Bubble Burst

Question: What does it mean in economics terms, for a bubble to burst?

Okay, so due to the recent economics talks about a coming recession I've been hearing a lot of unknown terms being thrown around. Someone on TV said that the housing bubble burst, but i didn't know what it meant. In the past I've also heard the phrase "dot-com bubble." So basically I want to know the following: what is a bubble, why does it burst, and what happens when it bursts??

Answer: Another common term for a "bubble", used by Alan Greenspan during the "dot com" days is "irrational exuberance". Basically, its when people think there is much more money to be made in a certain sector of the economy then there really is, driving prices higher and higher (in a sense, blowing the bubble bigger and bigger). In the short term, people are making lots of money, so they keep investing more. Once people realize that they are mistaken (these dot coms are not actually producing anything valuable, or we've already built way more McMansions and condos then anyone can actually afford to buy given that the employment/income situation is so bad), "the bubble bursts", or "the house of cards comes tumbling down" as they also say. If the government doesn't burst the bubble, a few major players that are leading the pack decide its time to get out and put their profits somewhere safe, while everyone else is left out and loses most of what they put in.

The most famous economic "bubble burst" in history is the one that caused the Great Depression. It involved the whole entire stock market. People were taking out bank loans to buy stocks because stocks were so profitable in the short term, but when big players started to sell, the prices all plummeted, leaving people with a ton of debt and no savings. They weren't going to be paying back their loans, so the banks all failed too. That's unlikely to happen again because of changes that have been made, but as we see, it can still happen very easily in other sectors that aren't as well managed. Investors follow a "herd mentality" and so the only way to prevent bubbles from arising seems to be government regulation.

The saying "the bigger they are, the harder they fall" very much applies here. The burst of any major bubble is going to have "rippple effects" and cause damage in other sectors of the economy, and even other countries.

Vancouver Real Estate Bubble Burst

Housing Bubble Collapse

Question: What was there under Reagan AND Bush a huge housing and stock bubble, followed by a huge economic bust...?

...with bank collapses, real estate collapse, stock market collapse, and many unemployed leading to the necessity of bailouts and rescue packages?
I'm just curious.
There was a huge housing market crash in early 1989, right as GH Bush took over - that happened along with the Savings and Loans Collapses, which also needed a multi-billion dollar bailout, and they were all hauled in to Congress for questioning.
Sound familiar?
I know because bought a house in 1989 and got killed on it!
The Savings and Loan collapse also happened because of deregulation and uncontrolled lending - laws were passed to prevent it from happening again, until GW Bush cancelled them all!!!

Answer: Well, no matter what party you are from, I think you should at least notice this: Ronald Reagan was a real patriot! And he perhaps prevented the very thing that some of us fear today. NUCLEAR WAR! You people just don't realize how close we where to having a major conflict with the soviet union. In my opinion, Ronald Reagan is the best president to ever take office in my generation. And there was no economic bust under Reagan. Reagan was a far better president than Bush or Clinton. Sorry, thats just facts.

Ron Paul Morning Joe Predicts Economic Collapse due to Housing Bubble in 2003