Posted on 02/14/2009 9:40:54 AM PST by DogByte6RER
Richard McKenzie: We're in a 'policy bubble,' which, too, will burst
UC Irvine economics professor
By RICHARD B. McKENZIE
In the late 1990s, stock markets went through the "dot.com" bubble. Investors bought with "irrational exuberance" the new-era story that that the world economy had changed so much that high-flying price-earnings ratios for Internet stocks could be justified by the untold profits that virtually any firm establishing a low-cost "storefront" in cyberspace could earn into the distant future. The bubble burst in March 2000 when investors finally realized that the low cost of entry would ensure that profits of the vast majority of dot.com firms would be readily competed away.
Through the first five years of this century, a housing price bubble emerged, founded on the new-era story that housing would become ever scarcer and that all Americans, no matter their incomes and credit scores, deserved homeownership. Besides, the housing price bubble itself fortified the belief that the creditunworthy could and would handle mortgages with little to zero down payments and low "teaser" (subprime) interest rates, with the government subsidizing many mortgages in a variety of ways. The mortgage meltdown ensued when unworthy homeowners' monthly payments suddenly jumped upward, and they began walking away from their mortgages in droves.
In these two bubbles, few disputed the too-good-to-be-true storyline, much less dared to sound the alarm that the underlying logic was flawed – until after the bubbles had burst.
(Excerpt) Read more at ocregister.com ...
Ok. So let’s hope this guy is right. Then what will be the MSM+Obama spin when we see all the corruption and waste and fraud?
“Need more regulation”
“Need more taxes on the rich”
The libs are not going to just stand still and let the blame for this fall on their shoulders.
This should be required reading for everyone. Well, everyone but President Obama and the other dedicated Marxists who will never abandon their Marxism no matter what reality may be.
I have seen a lot of Democrats crowing about how they are gonna be in power for decades and that the Republicans are destroyed permanently. The response to any debate is “shaddup, we won”.
I remember when Gingrich won and Republicans were crowing about the “revolution”, how it would last for 40 years, and how the Democrats were goners.
The mid-terms this time are going to be a big surprise to them I am guessing.
Im thikning the same.
How ironic! At the bottom of the Web page I see an ad for “Free Government Money” with a photo of Obama...
later
Except Obama wants to create his very own FDR bubble...
so many scarry things, this is just one of them.
FDR after the worse 4 years in american economic history won a reelection with an even bigger democratic majorities.
So even after the policies fail, pubbies do not regain power to end this nightmare.
“The mid-terms this time are going to be a big surprise to them I am guessing.”
They might be surprised that they have won even more seats in congress or surprised they have lost both houses.
It would be nice if they lost both houses, only conservatives held the majority of seats and the law applied to everyone equally.
IMHO
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