TheRealMafoo said:
Home ownership, leaving the banks alone to regulate themselves, has always had home ownership at 60% of the population. Clinton wanted to get it to 66%, so the government games the system. They realized this meant giving loans to those higher risk. The reason Clinton wanted to stop at 66%, is he knew any number above that, meant giving loans to people who were a ridicules risk. By the time the bubble broke, home ownership was at 75%. Washington had to know the people getting the loans were wildly unqualified to own them. They just knew as soon as the number stopped going up, everything was going to collapse, so they took the short sided route, and kept trying to give loans. There is no way you can wash the governments hands on this. They caused this problem, and they know it was a problem years before it fell. |
A bubble will eventually cause targets to be overshot a lot, before the correction begins. I would say fallout of the dotcom bubble also lent to the madness. Investors were seeking the next big thing and cause things to spiral out of control.
