If you don’t know about it, now that there’s some news that the housing market in the US has known a drop that never occurred since the great depression, some people were already saying earlier that the US housing market had never that hyper inflated since just before the great depression.
I just a history lecture about what caused the great depression. It’s … fascinating :
http://us.history.wisc.edu/hist102/lectures/lecture19.html
Let’s enumerate those reasons :
1. Unequal distribution of wealth and income.
Hum, well no comment.
2. Unequal distribution of corporate power.
Hum, well no comment.
3. Bad banking structure.
That’s actually different. Great.
4. Foreign balance of payments.
Hum, well no comment.
5. Limited or poor state of economic intelligence.
How, that’s really different, we know so much more about economy now that then !
Let’s read more : « Most American economists and political leaders in 1929 still believed in laissez-faire and the self-regulating economy ». Ah ???
Well there’s one point that’s really different. By any measure, the banks of 2000 are a lot more regulated and sane than before the great depression. At least of today.
Because the American banks do have one weak point, still. Do you have any idea how much they own in housing loan ? A lot, and maybe even more than that. If the house market crashes, they will have a problem, and if we’re pessimistic, we should consider it could turn into a major problem.
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