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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.
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.
Panel I: The U.S. Housing Bust: Has It Bottomed? What Needs to Be Done Now?
Mark J. Perry, AEI
Thomas Zimmerman, UBS Investment Bank
Alex J. Pollock, AEI
Panel II: The European Debt Crisis: What’s a Central Bank to Do?
Desmond Lachman, AEI
John H. Makin, AEI
Chris Whalen, Tangent Capital Partners
Alex J. Pollock, AEI
Question and Answer Session
For more information, please contact Emily Rapp at [email protected], 202.419.5212.
For media inquiries, please contact Véronique Rodman at [email protected], 202.862.4871.
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. 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, Lachman is focused on the global macroeconomy, global currency issues and multilateral lending agencies.
John H. Makin is a former consultant to the U.S. Department of the Treasury, the Congressional Budget Office and the International Monetary Fund. He specializes in international finance and financial markets (stocks, bonds and currencies including the euro and the U.S. dollar). He also researches the U.S., Japanese and European economies (including monetary policy and tax and budget issues). He is the author of numerous books and articles on financial, monetary and fiscal policies. Makin writes AEI's monthly Economic Outlook.
Mark J. Perry is concurrently an AEI scholar 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.
Alex J. Pollock joined AEI in 2004 after 35 years in banking. He was president and CEO of the Federal Home Loan Bank of Chicago from 1991 to 2004. He is the author of numerous articles on financial systems and the organizer of the “Deflating Bubble” series of AEI conferences. In 2007, he developed a one-page mortgage form to help borrowers understand their mortgage obligations. At AEI, he focuses on financial policy issues, including housing finance, government-sponsored enterprises, retirement finance, corporate governance, accounting standards and the banking system. He is a director of the CME Group, the Great Lakes Higher Education Corporation, the International Union for Housing Finance and the chairman of the board of the Great Books Foundation.
Chris Whalen is senior managing director of Tangent Capital Partners in New York, where he works as an investment banker providing advisory services to companies in the financial services sector. He is the co-founder and vice chairman of the board of Lord, Whalen LLC, the parent company of Institutional Risk Analytics. Whalen currently edits “The Institutional Risk Analyst,” a weekly news report and commentary on significant developments in and around the global financial markets. He is a member of the Economic Advisory Committee of the Financial Industry Regulatory Authority. He is also the author of the December 2010 book "Inflated: How Money and Debt Built the American Dream.”
Thomas Zimmerman is a managing director at Union Bank of Switzerland (UBS). He has been involved in managing the firm's research efforts on asset-backed and mortgage-backed securities for the past 14 years. Before joining UBS, Zimmerman managed research groups on asset-backed and mortgage-backed securities at Prudential Securities and Chemical Bank. He started his research career as a vice president in the mortgage research department at Salomon Brothers. His research has appeared in numerous fixed-income publications and industry reference works, and he was a member of the UBS research team that consistently ranked first in the annual institutional investor survey of fixed-income analysts.