> I don't see how you don't end up with some depression in the housing market as a result of this, even if its uneven in whom it affects.
I don't think that's inconsistent with "the Fed has overreacted, and should have kept rates low/lower". It just means that probably more people would have been able to make the monthly payments, the depression would have been smaller.
And of course your implicit point is that letting too many bad loans fester could have (would have) cratered a sizeable portion of the financial system anyway.
But instead of treating this as an asset bubble we ended up with an understimulated recession. (It's completely ridiculous that US real estate with a growing population was seen as 'toxic assets' even by the government. Just put it on the balance sheet of some random agency and sell it later, when convenient. Or use it as social housing, whatever. But of course ... politics emerges from culture.)
I don't think that's inconsistent with "the Fed has overreacted, and should have kept rates low/lower". It just means that probably more people would have been able to make the monthly payments, the depression would have been smaller.
And of course your implicit point is that letting too many bad loans fester could have (would have) cratered a sizeable portion of the financial system anyway.
But instead of treating this as an asset bubble we ended up with an understimulated recession. (It's completely ridiculous that US real estate with a growing population was seen as 'toxic assets' even by the government. Just put it on the balance sheet of some random agency and sell it later, when convenient. Or use it as social housing, whatever. But of course ... politics emerges from culture.)