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It was a policy to prevent the wholesale collapse of the financial sector which in turn would cause a wholesale collapse of the US economy.
Markets started to collapse after the final version of TARP was signed into law and the government went to immediately finance the 750 billion dollars. Bernanke initiated QE in early November to bail out the markets by absorbing the new supply. He later expanded QE in Q1 2009 after the market started to collapse again.
They also had to suspend mark-to-market accounting for derivatives held by the banks so they would end the forced selling to meet capital requirements.
There were other QE's and other policies to follow.
Shortage of housing is also related to the MERS scandal and how the banks were required to step back from foreclosing due to lack of documentation, done differently in judicial vs. non-judicial foreclosure states. Bulk foreclosures, serial mortgage modifications (almost all mods require more mods in 2 years), and placing RE assets in the hands of a few all contributed.
All that markets can do is go up, go down, or stay about the same. But there is nothing to connect these various episodes into definable cycles.
Quote:
Originally Posted by Ultrarunner
I've managed rentals 35 years and still manage some that I managed back in the 1980's and in 35 years have seen several boom and bust cycles in the same neighborhoods.
If something continually repeats it sure gives the indication of being cyclical.
I agree with Pubbie on this one. Shock, horror disbelief.
I suspect people are talking past one another on this because of the use of the words "cycle" and "cyclical." Those words have specific meaning to economists. Take the following chart of housing price increases over time.
My guess is Ultrarunner will see cyclicality.
My guess is Pubbie will see prices going up and down and staying the same, but without cyclicality, and I'm with Pubbie on this one.
The chart lacks cyclicality as there is no set of criteria to accurately forecast those price swings. Without a set of criteria and a formula to explain the past, you cannot forecast the future. If you can neither explain the past nor forecast the future without some degree of accuracy, it isn't a cycle.
OK, now I'll post the same chart and say "oops -- it wasn't housing price changes over time after all. It was coin flips." The chart is actually a random walk, and again random walks exhibit ups & downs without cyclicality.
I agree with Pubbie on this one. Shock, horror disbelief.
I suspect people are talking past one another on this because of the use of the words "cycle" and "cyclical." Those words have specific meaning to economists. Take the following chart of housing price increases over time.
My guess is Ultrarunner will see cyclicality.
My guess is Pubbie will see prices going up and down and staying the same, but without cyclicality, and I'm with Pubbie on this one.
The chart lacks cyclicality as there is no set of criteria to accurately forecast those price swings. Without a set of criteria and a formula to explain the past, you cannot forecast the future. If you can neither explain the past nor forecast the future without some degree of accuracy, it isn't a cycle.
OK, now I'll post the same chart and say "oops -- it wasn't housing price changes over time after all. It was coin flips." The chart is actually a random walk, and again random walks exhibit ups & downs without cyclicality.
I'm far from an economist and can make no claim...
My comments are based only on personal observation primarily in Oakland California...
Walking to school as a kid I would walk by many abandoned homes... blight, urban decay, white flight, etc... were constants with the remedy being urban renewal and subsidies... again, I was a child but the vacant properties were real.
Realizing abandoned home help no one the city started a program where it would sell these home for $1 to individuals willing to move in and make 5k of repairs... it could be a new roof, paint, windows and after 5 years the title was passed for $1
Some of these $1 homes were selling for 350k in 2007 and by 2009 were again vacant... and many stayed vacant and magnets for transients and drugs...
Eventually they were sold with prices around 50k... fast forward 8 years and they are selling in the $400-500k range.
This is how I see prices going up and down only to go up again.
20 years ago the neighbors 1000 square feet 1922 Bungalow sold for 80k... it was well done... 10 years ago this same home sold for 510k and 8 years ago sold foreclosure for 100k and again sold in 2013 for 240k and recently sold again for double that at 520k...
It certainly has been a wild ride for many... this is the same home and could be argued even improved lost 80% of value only to regain all of it and more 8 years later.
I bought a small cottage starting out and had about 40k in it when I sold in 2005 and it went for 255k...
Twelve months later it sold for 350k and in 2009 sold for 80k and I considered buying it back... the person that paid 80k is still living in it...
Not sure what you would call the market's ups and downs if not cyclical... prices here have repeatedly dropped significantly only to more than rebound and this has been the norm my entire life living in Oakland CA...
Nope ...but I do lament the lack of understanding.
The fault such as it exists is when those who actually can understand the issues
will go out of their way to cloud and muddy rather than to clarify or even qualify.
As to you in particular...you're the one who volunteered (yet again) to argue; to cloud and to muddy.
What do you gain from that?
Walking to school as a kid I would walk by many abandoned homes... blight, urban decay, white flight, etc...
Sounds like where I grew up on the wrong side of the railroad tracks in SoCal, adding in discarded syringes and used condoms.
Quote:
Originally Posted by Ultrarunner
This is how I see prices going up and down only to go up again.
Yep. I agree. At each point along the way, the sales price of the asset reflected the information available about what that property might be worth in the future.
Quote:
Originally Posted by Ultrarunner
Not sure what you would call the market's ups and downs if not cyclical... prices here have repeatedly dropped significantly only to more than rebound and this has been the norm my entire life living in Oakland CA...
I understand your point. My post was really to point out what I suspect was people accidentally talking past one another based solely on the definition of the noun "cycle" and its grammatical variations, which is a term of art among economists.
I guess I'd call it wild fluctuations and huge variance. I think most people would call it a cycle. However, at any given point in the chart, it is exceedingly difficult to forecast if the price of housing is going to go up from that point going forward -- or will it go down, or will it stay the same.
The disgraced Roberta Achtenberg, former Assistant Secretary of the U.S. Department of Housing and Urban Development for Fair Housing and Equal Opportunity under Clinton saw homeownership through the lens of social class, implementing policies to help people who could not afford a mortgage to buy a house get that mortgage anyway.
How many times have you posted that Moderator cut: .? Has it reached the level of dozens yet? The Search tool thinks it has.
Meanwhile, the credit crisis arose between 2002 and 2006 through the unconscionable acts of cowboy capitalists on Wall Street and the abject ignorance of laissez-faire regulators in Washington who let it all go down right under their noses while egging on the perpetrators.
Quote:
Originally Posted by SportyandMisty
And we all know how that turned out.
Yes, as the worst economic collapse since the Great Depression and yet another indelible blot on the GOP escutcheon.
Last edited by toosie; 07-23-2017 at 03:42 PM..
Reason: Ppl don't like to be told they're posting "Plagiarized bit of nonsense"
Perhaps you prefer the NY Times attribution of California's excess harmful regulations as a major factor in the shortage of residential housing:
Well, I agree with the authors' claim that Proposition 13 was a terrible idea, and certainly think that it should be repealed. Otherwise, the average sales price for an SFH where I live was recently in the range of $750,000. We don't have panic in the streets over this.
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