The central argument we make in our book is that the housing bust in combination with excessive household debt burdens were the key drivers of the economic downturn. Failure to more adequately address the housing disaster was the greatest policy mistake made in the Great Recession. One way to see the scars of the housing bust is …
Sorry we’ve been busy with the book, but will get back to posting soon. Here are some book-related links in case you’ve missed them: New York Times: The Case Against the Bernanke-Obama Financial Rescue Economist Free Exchange: The Opposite of Insurance Paul Krugman (NYT): Springtime for Bankers Book Interview on RT Boom/Bust Washington Post: Why Tim …
In the face of large-scale economic shocks, enforcing debt contracts places an unbearable burden on debtors, who cut back their spending and send the entire economy into deep recession. One of the main arguments we make in our new book is that debt forgiveness makes a lot of sense when the economy experiences a large-scale negative shock that …
We answer this question in our post for Fivethirtyeight.com. Here’s an extract. In 2000, the dot-com bubble burst, destroying $6.2 trillion in household wealth over the next two years. Five years later, the housing market crashed, and from 2007 to 2009, the value of real estate owned by U.S. households fell by nearly the same amount — …
Why the Housing Bubble Tanked the Economy And the Tech Bubble Didn’t Read More »
Here are some places to buy it online: The book is officially available for purchase. Here are some places to buy it online: Amazon University of Chicago Press Here are some very early reviews of both the book and the blog (more are coming): Christina D. Romer, former chair of the Council of Economic Advisers “Mian …
When the Class of 2009 entered college in 2005, they had good reason to be optimistic. The economy appeared to be healthy, and a college degree commanded higher wages. College, of course, is expensive. And almost 2 out of 3 students entering college took on some debt. They took on that debt believing that it …
Actions by the Federal Reserve are having strong effects on the price of stocks, bonds, and other financial assets in the economy. You can see this effect clearly on Fed meeting days, which are associated with large market movements. A question we tackled in an earlier post was: what assets bear the most risk of surprise Fed …
Excessive household debt was crucial in explaining the severity of the Great Recession. So where are we now? Have households strengthened their financial position since 2009? Are household balance sheets strong enough to prevent another massive pull back in spending if there are significant job losses? To answer to these questions, we look at evidence from the 2012 …
We are in our fourth week of blogging, and so far it has been a lot of fun! And a lot of work … we are learning new appreciation for people who do this for a living. We thought it would be a good time to share some links and thoughts in response to comments …
We are crunching some numbers trying to figure out what is going on with the house prices. In the meantime, here are some links which suggest that perhaps the sharp rebound in house prices is cooling. Zillow forecasting Case-Shiller February report sees slowdown. From the housing master himself at calculatedriskblog. Erin Carlyle at Forbes explains the weirdness of …
