AEIdeas

The public policy blog of the American Enterprise Institute

Subscribe to the blog

Discussion: (2 comments)

  1. David Stockman, former director of the Office of Management and Budget in the Reagan Administration sees little to get excited about.

    He tells The Daily Ticker, “I would say we have a housing bubble…again.”

    Stockman argues a combination of artificially low interest rates and speculation are to blame, not unlike the last boom and bust cycle in real estate.

    “We don’t have a real organic sustainable recovery because in a world of medicated money by the central bank, things aren’t what they appear to be,” Stockman argues.

    What we have now is a concerted attempt by lenders, the central bank, and government officials to reflate the bubble because the banks can’t afford the loss of capital associated with sales at “recovered” prices. Since banks stopped foreclosing on properties when the settlement agreement was reached, the MLS inventory dried up. Corresponding to this reduction in supply was a 30% decline in mortgage interest rates which greatly increased the ability of borrowers to bid up prices.

    http://ochousingnews.com/news/will-the-reflating-housing-bubble-also-burst

  2. Thomas Sullivan

    The Fed is propping up housing, federal borrowing, and banks. What could possibly go wrong?

Comments are closed.

Sort By:

Refine Content:

Scholar

Additional Keywords:

Refine Results

or to save searches.

Open
Refine Content