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Luminaries Rethink Housing Bubbles - Authors & Cato Institute

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Luminaries Rethink Housing Bubbles

http://www.moneynews.com/robertfeinberg/smith-baker-bank-housing/2014/10/31/id/604353/

vid & podcast

http://www.cato.org/events/rethinking-housing-bubbles-role-household-bank-balance-sheets-modeling-economic-cycles

In his commentary, Dean Baker, co-founder of the progressive Center for Economic and Policy Research, highlighted the fact that the worst excesses of the bubble were perpetrated by the private issuers of mortgage-backed securities — Goldman Sachs, Citigroup and Morgan Stanley, rather than Fannie Mae and Freddie Mac. (This writer would suggest taking a closer look at the relationship between Goldman and the government-sponsored enterprises, and perhaps the distinction is not so clear. Ultimately the three banks were treated as government-sponsored enterprises along with Fannie and Freddie, so to call them private institutions might be a bit misleading.)

Book mentioned

Rethinking Housing Bubbles: The Role of Household and Bank Balance Sheets in Modeling Economic Cycles

http://www.bookfinder.com/search/?author=&title=〈=en&isbn=9780521198097&new_used=*&destination=gb&currency=GBP&mode=basic&st=sr&ac=qr

Balance sheet crises, in which the prices of widely held and highly leveraged assets collapse, pose distinctive economic challenges. An understanding of their causes and consequences is only recently developing, and there is no agreement on effective policy responses. From backgrounds in experimental economics, Steven Gjerstad and Nobel laureate Vernon L. Smith examine events that led to and resulted from the recent U.S. housing bubble and collapse, as a case study in the formation and propagation of balance sheet crises. They then examine all previous downturns in the U.S. economy, including the Great Depression, and document substantive differences between the recurrent features of economic cycles and financial crises and the beliefs that public officials hold about them, especially within the Federal Reserve System. They conclude with an examination of similar events in other countries and assess alternative strategies to contain financial crises and to recover from them.
Edited by Saving For a Space Ship

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