
The big short, the housing bubble and the financial crisis - pilooch
http://cepr.net/blogs/beat-the-press/the-big-short-the-housing-bubble-and-the-financial-crisis
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danmaz74
Working cached link:
[http://webcache.googleusercontent.com/search?sourceid=chrome...](http://webcache.googleusercontent.com/search?sourceid=chrome-
psyapi2&ion=1&ie=UTF-8&q=cache%3Acepr.net%2Fblogs%2Fbeat-the-press%2Fthe-big-
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klenwell
On this topic, I always like to point to this illustration from The New York
Times:

[http://graphics8.nytimes.com/images/2005/06/15/business/arm3...](http://graphics8.nytimes.com/images/2005/06/15/business/arm3.gif)

Notice the date: 2005. That was around the time I started asking around, "How
can I short the housing market?"

I felt relieved reading The Big Short because it revealed that there wasn't
any way to do so at the time, especially for a little schmuck like me. And
even the guy who eventually figured out how to do it, Michael Burry, ended up
fantastically wealthy and, according to Michael Lewis, deeply embittered.

On this article, I agree that trying to treat the Housing Bubble and Financial
Crisis as independent events seems disingenuous. (Are there really serious
people trying to do this?)

Nevertheless, I question this claim:

 _We are supposed to feel good about this because it saved us from a Second
Great Depression. But there was nothing about the collapse of these banks
which would have condemned us to a decade of double-digit unemployment._

I abhor Wall St. and the industrial-finance complex it has created almost as
much as any Teapartier or Wall-Street-Occupier. But I don't understand the
scenario where those firms collapse and civilization as I know isn't put in,
if not serious peril, then unnecessary peril.

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toolz
If those giants were allowed to fall, there would be a vacuum that will be
filled faster than we would even notice. The only real problem is if the
collapse causes enough uncertainty that people stop spending money, but
really, are you more confident now that the giants are being propped up than
you would be if they were replaced?

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echochar
"8 trillion (@ 60 percent of GDP) in ephemeral housing equity"

"loss of 8 trillion in housing wealth"

Is this true?

How do you create 8 trillion in wealth?

If it was "lost" then who has the 8 trillion now?

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ArkyBeagle
[http://www.merriam-webster.com/dictionary/ephemeral](http://www.merriam-
webster.com/dictionary/ephemeral)

~~~
echochar
[https://en.wikipedia.com/wiki/Monetary_circuit_theory](https://en.wikipedia.com/wiki/Monetary_circuit_theory)

