In that this article absolves Greenspan, it is indeed counterfactual nonsense.
In its diagnosis of impotent regulation encouraged by corrupt and feckless legislators serving their donors, it is factual.
Back in 2004-2006, anybody who wanted to see what was coming would see it. I was renting a small house in a high end community (Newton MA) in that era. A neighbor who owned her little house next door (3br, 1.5 baths) said she was going to put in on the market for 1.2M. We agreed that she better sell it quickly, while the mortgage bubble was still expanding, if she wanted that kind of money for it.
Neither of us are economists or lawyers. People with access to lots of information could surely see the problems, if they hadn't had their heads in, well, the dark.
Fellow MA resident here. Grew up in Medfield, living in Natick, frequently visit Newton. The wealthier parts of these communities were relatively isolated from the bubble, and houses of that size are still selling for that much here today—sometimes a lot more, depending on the neighborhood. I don’t really see the point you’re trying to make.
I think the point OP is making is that incomes could not support that level of pricing during 2004-2006, only reckless levels of debts.
Now that 12-14 years have passed, incomes - and inflation - have risen and those same prices appear more reasonable. Accounting solely for inflation, $1.2 million today was worth $970,300 in 2006 and $901,900 in 2004.
It seems like a bad example, though. Most of the neighborhoods around here with that sort of pricing for that size house didn’t drop much, if any, during the real estate crash. It felt like a very distant problem here.
I lived in a similarly-priced neighborhood less than 30 minutes away during that time period. Houses continued to sell normally throughout, though sometimes they were on the market a little longer than they would’ve been previously. Prices continued to go up.
That's on purpose. The point of the "quantitative easing" that's been happening is two pronged. The first is to let the largest banks feign solvency. The second is to reinflate asset prices to rebuild bank balance sheets.
In its diagnosis of impotent regulation encouraged by corrupt and feckless legislators serving their donors, it is factual.
Back in 2004-2006, anybody who wanted to see what was coming would see it. I was renting a small house in a high end community (Newton MA) in that era. A neighbor who owned her little house next door (3br, 1.5 baths) said she was going to put in on the market for 1.2M. We agreed that she better sell it quickly, while the mortgage bubble was still expanding, if she wanted that kind of money for it.
Neither of us are economists or lawyers. People with access to lots of information could surely see the problems, if they hadn't had their heads in, well, the dark.