Two bubbles and two central banks: What now?

Video

Event Summary

Six years after the U.S. housing bubble started to pop, both the United States and Europe are plagued by tepid growth and falling asset prices and Europe is embroiled in endless financial troubles. Are we living in a post-bubble world yet?

Thursday, a distinguished panel at AEI looked at the emerging issues surrounding the bubble. Thomas Zimmerman of UBS examined the housing market to demonstrate that, while the market is moving the right way, it is still much worse than it looks. AEI's Mark Perry followed up by pointing out that more people are currently buying more houses more frequently and at higher prices than they have in years.

The panel then shifted from the housing bubble to Europe banking bubble, as Desmond Lachman showed how the European Union's pro-cyclical policies will make the troubles in Europe worse in the coming months. Christopher Whalen then argued that fears of bad financial policy and of fraud have scared an investment recovery out of existence, and John Makin closed by explaining how central bank policy has compounded recent bubble problems by driving investors out of the market.

The event ended with a transition from bubbles to bubbly as an audience member received a surprise marriage proposal.

--Daniel Hanson

Event Description

It has been six dreary years since the U.S. housing bubble peaked, and there are finally suggestions that the housing market has at long last bottomed out. But has it? If so, what are the financial and public policy implications? And Europe’s bubble: how much longer will its sovereign debt and banking crisis drag on, and how much worse will it get? 

Saddled with the rubble of a burst bubble, central banks are tasked with picking up the pieces. How might we assess the past actions of the Fed and the European Central Bank as “investors of last resort,” and how can we evaluate their challenges going forward?  These and other relevant questions will be addressed by an expert panel at this AEI event.

If you cannot attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.

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About the Author

 

John H.
Makin
  • John H. Makin is a resident scholar at the American Enterprise Institute (AEI) where he studies the US economy, monetary policy, financial markets, corporate taxation and banking. He also studies and writes frequently about Japanese, Chinese and European economic issues.

    Makin has served as a consultant to the US Treasury Department, the Congressional Budget Office, and the International Monetary Fund. He spent twenty years on Wall Street as the chief economist, and later as a principal of Caxton Associates a trading and investment firm. Earlier, Makin taught economics at various universities including the University of Virginia. He has also been a scholar at the Bank of Japan, the Federal Reserve Bank of San Francisco, the Federal Bank of Chicago, and the National Bureau of Economic Research. A prolific writer, Makin is the author of numerous books and articles on financial, monetary, and fiscal policy. Makin also writes AEI's monthly Economic Outlook which pairs insightful research with current economic topics.

    Makin received his doctorate and master’s degree in economics from University of Chicago, and bachelor’s degree in economics from Trinity College.


    Follow John Makin on Twitter.

  • Phone: 202-862-5828
    Email: jmakin@aei.org
  • Assistant Info

    Name: Brittany Pineros
    Phone: 202-862-5926
    Email: brittany.pineros@aei.org

 

Desmond
Lachman
  • Desmond Lachman joined AEI after serving as a managing director and chief emerging market economic strategist at Salomon Smith Barney. He previously served as deputy director in the International Monetary Fund's (IMF) Policy Development and Review Department and was active in staff formulation of IMF policies. Mr. Lachman has written extensively on the global economic crisis, the U.S. housing market bust, the U.S. dollar, and the strains in the euro area. At AEI, Mr. Lachman is focused on the global macroeconomy, global currency issues, and the multilateral lending agencies.
  • Phone: 202-862-5844
    Email: dlachman@aei.org
  • Assistant Info

    Name: Emma Bennett
    Phone: 202.862.5862
    Email: emma.bennett@aei.org

 

Alex J.
Pollock
  • Alex J. Pollock is a resident fellow at the American Enterprise Institute (AEI), where he studies and writes about housing finance; government-sponsored enterprises, including Fannie Mae, Freddie Mac, and the Federal Home Loan Banks; retirement finance; and banking and central banks. He also works on corporate governance and accounting standards issues.


    Pollock has had a 35-year career in banking and was president and CEO of the Federal Home Loan Bank of Chicago for more than 12 years immediately before joining AEI. A prolific writer, he has written numerous articles on financial systems and is the author of the book “Boom and Bust: Financial Cycles and Human Prosperity” (AEI Press, 2011). He has also created a one-page mortgage form to help borrowers understand their mortgage obligations.


    The lead director of CME Group, Pollock is also a director of the Great Lakes Higher Education Corporation and the chairman of the board of the Great Books Foundation. He is a past president of the International Union for Housing Finance.


    He has an M.P.A. in international relations from Princeton University, an M.A. in philosophy from the University of Chicago, and a B.A. from Williams College.


  • Phone: 202.862.7190
    Email: apollock@aei.org
  • Assistant Info

    Name: Emily Rapp
    Phone: (202) 419-5212
    Email: emily.rapp@aei.org

 

Mark J.
Perry
  • Mark J. Perry is concurrently a scholar at AEI and a professor of economics and finance at the University of Michigan's Flint campus. He is best known as the creator and editor of the popular economics blog Carpe Diem. At AEI, Perry writes about economic and financial issues for American.com and the AEIdeas blog.

    Follow Mark Perry on Twitter.


  • Phone: 202.419.5207
    Email: mark.perry@aei.org

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