On Mar 9, 2010, at 10:55 AM, Louis Proyect wrote:
Counterpunch March 9, 2010
The Rise and Demise of the Housing Bubble
Stop Calling It a Financial Crisis
By DEAN BAKER
The politicians and the media continue to refer to the economic
downturn as being the result of a financial crisis. This is wrong.
We have 15 million people out of work because the housing bubble
that drove the economy since the last recession finally burst. The
financial crisis may have been good entertainment for those who like
to see huge banks collapse, but it was a sidebar. The real story was
the rise and demise of the housing bubble.
So why the housing bubble? What about very low interest rates combined
with a financially stressed household sector that turned to mortgage
borrowing and housing speculation to compensate for stagnant labor
market income? Longer term, what about the "solution" to the
profitability crisis of the 1970s that required an assault on working
class living standards, but needed debt as a way of maintaining
aggregate demand and political legitimacy?
Doug
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