Posts filed under “Bailout Nation”

Global Housing Boom

I have been adding some additional charts to my powerpoint for this afternoon.I am choosing amongst the areas I want to discuss, when an email came in regarding my presentation.

One of the conference participants made the following challenge to me:

“Can you support your position, in a fast, easy way, why the US housing boom was NOT caused by Fannie and Freddie, or the CRA? I understand all the factors you laid out in the book — but I would like to see more evidence to support your view.”

Well, its difficult to prove a negative — supporters of the “FNM/FRE/CRA caused it” should have to prove their case, as I did in Bailout Nation.

However, I have always found this chart to be quite compelling:


Chart via BIS by way of


Pray tell what caused the same boom and bust in these other nations?

And how could Fannie/Freddie or the CRA be responsible — that only applies to the US — when you have the same, global, coordinated rise in prices?  (And you can add Korea and New Zealand to the chart above).

For those of you who still believe the political talking point that it was FNM/FRE/CRA’s fault, the question remains: What caused these other nations to boom the same time the USA did?

And if you can’t answer that, then what hope do we have that you will offer up empirical evidence that Fannie/Freddie/CRA caused this in light of the above?

(This is what I mean by squishy thinking . . .)


UPDATE: July 21, 2010 10:35am

In a discussion with some of the more vocal “FNM/CRA caused the crisis” advocates, I made the following point that seems to have resonated with a few of them:

We must distinguish between US legislative policy — and that includes Fannie/Freddie and the CRA — with the monetary policy of the US Federal Reserve, and its impact around the world.

American legislative policies had some impact domestically, but the total result of the CRA was not global, not was the GSE impact Global. Hence, how could FNM/FRE/CRA cause a global housing boom & bust? Answer, it didn’t.

The US Federal Reserve’s monetary policy, on the other hand, did have a global impact. The US has the world’s reserve currency, the biggest economy and the most important central bank.  When the Fed took rates down to 1%, it had an ginormous impact on everything priced in debt, dollars or leverage. That includes housing, around the world.

Category: Bailout Nation, Real Estate, Really, really bad calls

Bailout Nation: Paperback Is Here!

Wow, I almost let this slip by unannounced: The paperback edition of Bailout Nation is here ($11.53 for the paperback, $10.38 for the kindle edition). There is a new chapter on whether the Reform legislation will fix much of anything (take a guess where I fall no this). The cover has reviews instead of blurbs,…Read More

Category: Bailout Nation

A Brief History of Bailouts

The paperback of Bailout Nation is out today! Here is the first chapter: > Brief History of Bailouts

Category: Bailout Nation, Books

Wall Street/Las Vegas Casino Banks

StereoHell/Imp Kerr, who did the fantastic illustrations for the Bailout Nation chapter titled Casino Capitalism, is showing the very same work at the Tribeca Grand. (full size versions can be seen here) The show has a website where you can purchase the artwork, including all of the bailed banks as Las Vegas Casino drawings:  …Read More

Category: Bailout Nation, Bailouts, Really, really bad calls

Delay Pay? Try Partnership Liability.

In the Sunday NYT, Yale Professor Robert Shiller discusses one of the recommendations of the Squam Lake Report — holding back some executive compensation to align their risk with taxpayers (Help Prevent a Sequel. Delay Some Pay.) Here is their recommendation: “The Squam Lake group recommends that companies be encouraged to withhold a good part…Read More

Category: Bailout Nation, Bailouts, Corporate Management, Regulation, Wages & Income

Fannie & Freddie: Chasing Profits, Market Share

Joe Nocera cuts right to the heart of the “Blame Fannie and Freddie” argument in today’s NYT. It is an article well worth your time to read. He looks a the CATO/AEI narrative — that the government forced the GSEs (and the banks through the CRA) to make ill advised loans to people who could…Read More

Category: Bailout Nation, Bailouts, Credit, Real Estate, Really, really bad calls

Six Banks Made $51 Billion in ’09 (The rest lost money)

I gave myriad reasons in Bailout Nation for being strongly opposed to bank bailouts. One of the most compelling factors was the horrific impact past bailouts have had on other competitors in the sector. Bailouts rewarded the worst managements, the least deserving shareholders, and the most reckless creditors. (That’s not how capitalism is supposed to…Read More

Category: Bailout Nation, Bailouts, Credit

Bloomberg: Top 50 Business Books

Very cool! Bloomberg names Bailout Nation as one of the top 50 Business books: May 28 (Bloomberg) — With so many business books spilling from the shelves, we’re often asked for a comprehensive list of recommendations. Here are 50 of our favorite titles published since Jan. 1, 2009. “Animal Spirits” by George A. Akerlof and…Read More

Category: Bailout Nation, Books

Washington & Wall Street: The New Regulatory Regime

Today, I am in Las Vegas for the SALT II conference: I am on a panel discussion about regulation, reform and bailouts with Austan Goolsbee, Advisor to President Obama, and Bill Thomas, Vice Chairman of the Financial Crisis Inquiry Commission. Should be fun . . .  be sure to stop me and say hello if…Read More

Category: Bailout Nation, Bailouts, Derivatives, Regulation

Impossible Wall Street Fixes

I submitted my new chapter for the paperback version of Bailout Nation (July 6, 2010). It contains a checklist to evaluate the upcoming — and as of yet, still ill defined — re-regulation of the financial sector. I tried to keep it realistic, discussing issues such as derivatives regulation, capital requirements, and leverage. However, I…Read More

Category: Bailout Nation, Bailouts, Credit, Legal, Regulation