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==Summary== | ==Summary== | ||
In '''2002''', [[Robert Blumen]] summed up the effect of the activities of Fannie and Freddie on the housing market as shows the systemic risk and foresaw a coming bailout.<ref name="Blumen_Fannie">Blumen, Robert. [ | In '''2002''', [[Robert Blumen]] summed up the effect of the activities of Fannie and Freddie on the housing market as shows the systemic risk and foresaw a coming bailout.<ref name="Blumen_Fannie">Blumen, Robert. [https://mises.freecapitalists.org/daily/986 "Fannie Mae Distorts Markets"], ''Mises Daily'', June 17, 2002. Referenced 2011-01-10.</ref> [[Sean Corrigan]] pointed to the blooming real estate business among all the bankruptcies, and noted that real estate bubbles tend to pop several years after stock market bubbles, and that mortgages may fare much worse compared to stocks... along with their owners.<ref name="Corrigan_Trouble">Corrigan, Sean. [https://mises.freecapitalists.org/daily/994 "The Trouble with Debt"], ''Mises Daily'', July 01, 2002. Referenced 2011-01-10.</ref> Congressman [[Ron Paul]] criticized government involvement in housing, and said that like all artificially created bubbles, the boom in housing prices cannot last forever.<ref name="Paul_Testimony">Paul, Ron. [http://paul.house.gov/index.php?option=com_content&task=view&id=323&Itemid=60 "Testimony to U.S. House of Representatives"], July 16, 2002. Referenced 2011-01-10.</ref> | ||
In '''2004''', [[Mark Thornton]] wrote that higher interest rates (indicated by the Fed) "should trigger a reversal in the housing market and expose the fallacies of the new paradigm, including how the housing boom has helped cover up increases in price inflation. Unfortunately, this exposure will hurt homeowners and the larger problem could hit the American taxpayer, who could be forced to bailout the banks and government-sponsored mortgage guarantors who have encouraged irresponsible lending practices."<ref name="Thornton_Housing">Thornton, Mark. "[ | In '''2004''', [[Mark Thornton]] wrote that higher interest rates (indicated by the Fed) "should trigger a reversal in the housing market and expose the fallacies of the new paradigm, including how the housing boom has helped cover up increases in price inflation. Unfortunately, this exposure will hurt homeowners and the larger problem could hit the American taxpayer, who could be forced to bailout the banks and government-sponsored mortgage guarantors who have encouraged irresponsible lending practices."<ref name="Thornton_Housing">Thornton, Mark. "[https://mises.freecapitalists.org/daily/1533 Housing: too good to be true.]" June 4, 2004. Referenced 2011-01-10.</ref> Later on, he spelled out the consequences for the construction industry, unemployment, foreclosures, bankruptcies, bailouts of banks and GSEs, and a long recession.<ref name="Thornton">Thornton, Mark. [https://freecapitalists.org/journals/scholar/thornton13/ "The Economics of Housing Bubbles"], June 2006, p. 27, 29, 31. Referenced 2011-01-10.</ref> | ||
[[Stefan Karlsson]] wrote that the next crisis will be more serious than the mild recession of 2001 one; as it is, in fact, that very same crisis, only postponed.<ref name="Karlsson_Unsustainable">Karlsson, Stefan. [ | [[Stefan Karlsson]] wrote that the next crisis will be more serious than the mild recession of 2001 one; as it is, in fact, that very same crisis, only postponed.<ref name="Karlsson_Unsustainable">Karlsson, Stefan. [https://mises.freecapitalists.org/daily/1670 "America's Unsustainable Boom"], ''Mises Daily'', November 8, 2004. Referenced 2011-01-10.</ref> | ||
In '''2005''', [[Doug French]] after observing the mania in Vegas, quipped "condos are the last segment of the housing market to catch fire in a boom and the first to crater in a bust.", and concluded that the bust must be close.<ref name="French_Condo-mania">French, Doug. [ | In '''2005''', [[Doug French]] after observing the mania in Vegas, quipped "condos are the last segment of the housing market to catch fire in a boom and the first to crater in a bust.", and concluded that the bust must be close.<ref name="French_Condo-mania">French, Doug. [https://mises.freecapitalists.org/daily/4403 "Condo-mania."], ''Mises Daily'', July 11, 2005. Referenced 2011-01-10.</ref> [[Gary North]] warned against the danger of ARMs (adjustable rate mortgages).<ref name="North_Surreal">North, Gary. [http://www.lewrockwell.com/north/north416.html "Surreal Estate on the San Andreas Fault."], November 25, 2005. Referenced 2011-01-10.</ref> | ||
Investor [[Peter Schiff]] acquired fame in a series of TV appearances (most in 2006 and 2007), where he opposed a multitude of financial experts and claimed that a bust was to come.<ref name="Schiff_Right">Schiff, Peter. "[http://www.youtube.com/watch?v=2I0QN-FYkpw&feature=related Peter Schiff Was Right]" (video). Referenced 2011-01-10.</ref> He was warning about the speculation, ARMs, houses that couldn't be sold, people walking away from them and coming bailouts for several years before in print.<ref name="Schiff_Commentary_2003">Schiff, Peter. [http://www.europac.net/commentaries/fed_official_admits_emperor_has_no_clothes "Fed official admits the emperor has no clothes!"], Commentary, March 10, 2003. Referenced 2011-01-10.</ref><ref name="Schiff_Commentary_2004">Schiff, Peter. [http://www.europac.net/commentaries/arms_way_tender_trap_adjustable_rate_mortgages "In Arm's Way: The Tender Trap of Adjustable Rate Mortgages."], Commentary, May 7, 2004. Referenced 2011-01-10.</ref><ref name="Schiff_Commentary_2005">Schiff, Peter. [http://www.europac.net/commentaries/housing_speculation_more_rampant_you_think "Housing Speculation is More Rampant Than You Think."], Commentary, July 5, 2005. Referenced 2011-01-10.</ref> | Investor [[Peter Schiff]] acquired fame in a series of TV appearances (most in 2006 and 2007), where he opposed a multitude of financial experts and claimed that a bust was to come.<ref name="Schiff_Right">Schiff, Peter. "[http://www.youtube.com/watch?v=2I0QN-FYkpw&feature=related Peter Schiff Was Right]" (video). Referenced 2011-01-10.</ref> He was warning about the speculation, ARMs, houses that couldn't be sold, people walking away from them and coming bailouts for several years before in print.<ref name="Schiff_Commentary_2003">Schiff, Peter. [http://www.europac.net/commentaries/fed_official_admits_emperor_has_no_clothes "Fed official admits the emperor has no clothes!"], Commentary, March 10, 2003. Referenced 2011-01-10.</ref><ref name="Schiff_Commentary_2004">Schiff, Peter. [http://www.europac.net/commentaries/arms_way_tender_trap_adjustable_rate_mortgages "In Arm's Way: The Tender Trap of Adjustable Rate Mortgages."], Commentary, May 7, 2004. Referenced 2011-01-10.</ref><ref name="Schiff_Commentary_2005">Schiff, Peter. [http://www.europac.net/commentaries/housing_speculation_more_rampant_you_think "Housing Speculation is More Rampant Than You Think."], Commentary, July 5, 2005. Referenced 2011-01-10.</ref> | ||
==Predictions== | ==Predictions== | ||
<small>Anderson, 2001, 2003, 2007; Armentano, 2004; Beale, 2009; Blumen, 2002, 2004, 2005; Corrigan, 2002; Crovelli, 2006; DeCoster, 2003; Duffy, 2005A, 2005B, 2005C, 2005D, 2006, 2007A, 2007B, 2007C, 2007D; Economics of contempt, 2008; Englund, 2004, 2005A, 2005B, 2005C, 2005D, 2006, 2007, 2008; French, 2005; Grant, 2001; Karlsson, 2004; Mayer, 2003; Murphy, 2007, 2008; North, 2002, 2005; Paul, 2000, 2002; Polleit, 2006; Ptak, 2003; Rockwell, 2008; Rogers, 2005; Schiff, Undated A, Undated B, Undated C, Undated D, 2003A, 2003B, 2003C, 2004A, 2004B, 2005A, 2005B, 2005C, 2005D, 2006A, 2006B, 2006C, 2007A, 2007B; Sennholz, 2002; Shostak, 2003, 2005; Thornton, 2004A, 2004B, | Prediction shortlist:<br> | ||
<small>Anderson, 2001, 2003, 2007; Armentano, 2004; Beale, 2009; Blumen, 2002, 2004, 2005; Corrigan, 2002; Crovelli, 2006; DeCoster, 2003; Duffy, 2005A, 2005B, 2005C, 2005D, 2006, 2007A, 2007B, 2007C, 2007D; Economics of contempt, 2008; Englund, 2004, 2005A, 2005B, 2005C, 2005D, 2006, 2007, 2008; French, 2005; Grant, 2001; Karlsson, 2004; MacKenzie, 2003; Mayer, 2003; Mueller, 2004; Murphy, 2007, 2008; North, 2002, 2005; Paul, 2000, 2002; Polleit, 2006; Ptak, 2003; Rockwell, 2002, 2008; Rogers, 2005; Schiff, Undated A, Undated B, Undated C, Undated D, 2003A, 2003B, 2003C, 2004A, 2004B, 2005A, 2005B, 2005C, 2005D, 2006A, 2006B, 2006C, 2007A, 2007B; Sennholz, 2002; Shostak, 2003, 2005; Thornton, 2004A, 2004B, 2005A, 2005B, 2005C, 2006, 2007A, 2007B, 2007C, 2007D; Trask, 2003; Wenzel, 2004; See also Woods (2009, p. 188 for further bibliography).</small> | |||
Anderson, William L. | Anderson, William L. 2001. "[https://mises.freecapitalists.org/daily/617 The Party is Over]," February 20 <!-- more of a summary of the preceding boom and a hint about a coming bust --> | ||
Anderson, William L. 2007. "[ | Anderson, William L. 2003. "[https://mises.freecapitalists.org/daily/1265 Recovery or Boomlet?]" July 07 <!-- noting the temporary recovery is not a recovery --> | ||
Anderson, William L. 2007. "[https://mises.freecapitalists.org/daily/2675 The Party is Over – Again]," August 30 <!-- predicts the coming stock market meltdown --> | |||
Armentano, Dominick. 2004. "[http://www.cato.org/pub_display.php?pub_id=2510 Memo to Federal Reserve: Increase Interest Rates Now!]" <!-- notes the rise of the housing bubble and foretells a bust --> | Armentano, Dominick. 2004. "[http://www.cato.org/pub_display.php?pub_id=2510 Memo to Federal Reserve: Increase Interest Rates Now!]" <!-- notes the rise of the housing bubble and foretells a bust --> | ||
| Line 28: | Line 30: | ||
Beale, Theodore. 2009. "[http://superstore.wnd.com/books/WND-Books/The-Return-of-the-Great-Depression-Autographed-Hardcover The Return of the Great Depression]" <!-- according to the book description, the then unfolding recession will be much larger than expected --> | Beale, Theodore. 2009. "[http://superstore.wnd.com/books/WND-Books/The-Return-of-the-Great-Depression-Autographed-Hardcover The Return of the Great Depression]" <!-- according to the book description, the then unfolding recession will be much larger than expected --> | ||
Blumen, Robert. 2002. "[ | Blumen, Robert. 2002. "[https://mises.freecapitalists.org/daily/986 Fannie Mae Distorts Markets.]" Mises Daily, June 17 <!-- spells out the effect of Fannie and Freddie on the housing market, shows the systemic risk and foresees the coming bailout --> | ||
Blumen, Robert. 2004. "[http://www.lewrockwell.com/orig3/blumen4.html All Real Estate, All the Time]". March 8 <!-- housing as the unstable driver of economic activity in the US --> | Blumen, Robert. 2004. "[http://www.lewrockwell.com/orig3/blumen4.html All Real Estate, All the Time]". March 8 <!-- housing as the unstable driver of economic activity in the US --> | ||
| Line 34: | Line 36: | ||
Blumen, Robert. 2005. "[http://blog.mises.org/3566/housing-bubble-are-we-there-yet/ Housing Bubble: Are We There Yet?]" May 8 <!-- documents rise of the bubble with many resources --> | Blumen, Robert. 2005. "[http://blog.mises.org/3566/housing-bubble-are-we-there-yet/ Housing Bubble: Are We There Yet?]" May 8 <!-- documents rise of the bubble with many resources --> | ||
Corrigan, Sean. 2002. "[ | Colombo, Jesse. 2005. "[http://web.archive.org/web/20081207011231/http://timesbusiness.typepad.com/money_weblog/2008/10/10-people-who-p.html/ Ten People Who Predicted The Financial Meltdown]" (via Archive.org) | ||
Corrigan, Sean. 2002. "[https://mises.freecapitalists.org/daily/994 The Trouble with Debt]". July 01 <!-- Shows the blooming business among all the bankruptcies, notes that real estate bubbles tend to pop several years after stock market bubbles, and that mortgages may fare much worse compared to stocks... along with their owners. --> | |||
Crovelli, Mark R. 2006. "[http://www.kitco.com/ind/crovelli/may312006.html Gold, Inflation, And... Austria?]" May 31 <!-- summarizes the ABCT and says commercial and residential real estate markets are poised to rupture violently --> | Crovelli, Mark R. 2006. "[http://www.kitco.com/ind/crovelli/may312006.html Gold, Inflation, And... Austria?]" May 31 <!-- summarizes the ABCT and says commercial and residential real estate markets are poised to rupture violently --> | ||
| Line 76: | Line 80: | ||
Englund, Eric. 2008. "[http://www.lewrockwell.com/englund/englund43.html Countrywide Financial Corporation and the Failure of Mortgage Socialism.]" January 28 <!-- the Countrywide collapse --> | Englund, Eric. 2008. "[http://www.lewrockwell.com/englund/englund43.html Countrywide Financial Corporation and the Failure of Mortgage Socialism.]" January 28 <!-- the Countrywide collapse --> | ||
French, Doug. 2005. "[ | French, Doug. 2005. "[https://mises.freecapitalists.org/daily/4403 Condo-mania.]" July 11 <!-- mania in Vegas; "condos are the last segment of the housing market to catch fire in a boom and the first to crater in a bust." --> | ||
Grant, James. 2001. "[http://www.nytimes.com/2001/09/09/opinion/09GRAN.html?ex=1001147153&ei=1&en=898b/8611aaca6946 Sometimes the Economy Needs a Setback.]" New York Times. September 9 <!-- basically sums up the dot-com bubble - any particular prediction here? --> | Grant, James. 2001. "[http://www.nytimes.com/2001/09/09/opinion/09GRAN.html?ex=1001147153&ei=1&en=898b/8611aaca6946 Sometimes the Economy Needs a Setback.]" New York Times. September 9 <!-- basically sums up the dot-com bubble - any particular prediction here? --> | ||
Karlsson, Stefan. 2004. "[ | Karlsson, Stefan. 2004. "[https://mises.freecapitalists.org/daily/1670 America's Unsustainable Boom.]" November 8 <!-- the next crisis more serious than the last one; actually, it is postponed --> | ||
MacKenzie, D.W. 2003. "[https://mises.freecapitalists.org/daily/1337/Doubts-about-Recovery Doubts about Recovery]" October 08 <!-- general prediction of the next crisis --> | |||
Mueller, Antony P. 2004. "[ | Mayer, Chris. 2003. "[https://mises.freecapitalists.org/freemarket_detail.aspx?control=450&sortorder=articledate The Housing Bubble.]" The Free Market. Volume 23, Number 8 August <!-- about housing bubbles bursting in general --> | ||
Mueller, Antony P. 2004. "[https://mises.freecapitalists.org/daily/1627 Mr Bailout]", September 30 <!-- About then-Fed chairman Greenspan. "Greenspan fulfilled his mission in the wake of the 1987 stock market debacle. He made sure that the government could easily finance two wars in the Middle East. He did his bailout job by saving the creditors of the LTCM hedge fund; he did it in face of an expected Y2K liquidity squeeze, and he is doing it now by fabricating the housing bubble." --> | |||
Murphy, Robert P. 2007 "[http://blog.mises.org/7590/the-feds-role-in-the-housing-bubble/ The Fed’s Role in the Housing Bubble.]" December 28 <!-- nice cause-and-effect demonstration, but no prediction --> | Murphy, Robert P. 2007 "[http://blog.mises.org/7590/the-feds-role-in-the-housing-bubble/ The Fed’s Role in the Housing Bubble.]" December 28 <!-- nice cause-and-effect demonstration, but no prediction --> | ||
Murphy, Robert P. 2008. "[ | Murphy, Robert P. 2008. "[https://mises.freecapitalists.org/daily/3203 Did the Fed, or Asian Saving, Cause the Housing Bubble?]" November 19 <!-- summary of the housing bubble, no predictions but links to some --> | ||
North, Gary. 2002. "[http://www.garynorth.com/members/login.cfm?hpage=351.cfm How the FED Inflated the Real Estate Bubble by Pushing Down Mortgage Rates: Report As of 2002,]" Reality Check, March 4 <!-- unknown, access restricted by subscription --> | North, Gary. 2002. "[http://www.garynorth.com/members/login.cfm?hpage=351.cfm How the FED Inflated the Real Estate Bubble by Pushing Down Mortgage Rates: Report As of 2002,]" Reality Check, March 4 <!-- unknown, access restricted by subscription --> | ||
| Line 101: | Line 107: | ||
:"However, despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged overinvestment in housing." --> | :"However, despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged overinvestment in housing." --> | ||
Polleit, Thorsten. 2006. "[ | Polleit, Thorsten. 2006. "[https://mises.freecapitalists.org/daily/2111 Sowing the Seeds of the Next Crisis.]" April 25 <!-- crises follow expansions of money supply --> | ||
Ptak, Justin. 2003. "[http://www.lewrockwell.com/orig4/ptak3.html Government Employees, Go Home!]" November 12 <!-- "I am tired of an inflated mortgage market sapping funds from original development. I hope and pray we don’t see a crash." Not exactly a prediction. --> | Ptak, Justin. 2003. "[http://www.lewrockwell.com/orig4/ptak3.html Government Employees, Go Home!]" November 12 <!-- "I am tired of an inflated mortgage market sapping funds from original development. I hope and pray we don’t see a crash." Not exactly a prediction. --> | ||
Rockwell, Llewellyn H, Jr. 2008. [ | Rockwell, Llewellyn H, Jr. 2002. "[https://mises.freecapitalists.org/daily/929 The Marvel That Is Capitalism]" April 08 <!-- "Housing, in particular, has boomed all out of proportion to what it would otherwise do in a free market. If any sector is being set up for a fall today, it is this one." --> | ||
Rockwell, Llewellyn H, Jr. 2008. [https://freecapitalists.org/books/the-left-the-right-and-the-state/ The Left, the Right, and the State]. Auburn, AL: The Mises Institute, 2008 <!-- collection of articles from various dates, can't read it all; the only mention of a possible housing bubble seems to be in p.462-463 (article from April 2008) --> | |||
Rogers, Jim. 2005. "[http://thehousingbubble.blogspot.com/2005/04/jim-rogers-on-housing-bubble.html Interview with Jim Rogers on the housing bubble.]" April 22 <!-- A short Q&A on some random blog, basically says Jim Rogers says there is a bubble. There should be something better out there! --> | Rogers, Jim. 2005. "[http://thehousingbubble.blogspot.com/2005/04/jim-rogers-on-housing-bubble.html Interview with Jim Rogers on the housing bubble.]" April 22 <!-- A short Q&A on some random blog, basically says Jim Rogers says there is a bubble. There should be something better out there! --> | ||
| Line 146: | Line 154: | ||
Schiff, Peter. 2007B. [http://www.europac.net/media/tv_interviews/peter_schiff_january_12_2007_fox Appearance on Fox News – January 12] (video) <!-- sparring about whether there is a bubble or not --> | Schiff, Peter. 2007B. [http://www.europac.net/media/tv_interviews/peter_schiff_january_12_2007_fox Appearance on Fox News – January 12] (video) <!-- sparring about whether there is a bubble or not --> | ||
Sennholz, Hans F. 2002. "[ | Sennholz, Hans F. 2002. "[https://mises.freecapitalists.org/daily/1089 The Fed is Culpable.]" November 11 <!-- if a limit is put on stock market speculation: "The credits created by the Fed and the bank credits resting on the Fed funds undoubtedly would have found other uses and created other investment bubbles, such as in real estate, precious metals, or objects of art and collection." --> | ||
Shostak, Frank. 2003. "[ | Shostak, Frank. 2003. "[https://mises.freecapitalists.org/daily/1177 Housing Bubble: Myth or Reality?]" March 4 <!-- shows the reality of the housing bubble; basically says it could burst anytime --> | ||
Shostak, Frank. 2005 "[ | Shostak, Frank. 2005 "[https://mises.freecapitalists.org/daily/1882 Is There a Glut of Saving?]" August 4 <!-- a glut of saving didn't cause the bubble, the Fed did - no predictions --> | ||
Thornton, Mark. 2004A. "[http://www.lewrockwell.com/thornton/thornton11.html 'Bull' Market?]" February 9. <!-- basic analysis of a large housing bubble --> | Thornton, Mark. 2004A. "[http://www.lewrockwell.com/thornton/thornton11.html 'Bull' Market?]" February 9. <!-- basic analysis of a large housing bubble --> | ||
Thornton, Mark. 2004B. "[ | Thornton, Mark. 2004B. "[https://mises.freecapitalists.org/daily/1533 Housing: too good to be true.]" June 4 <!-- "It has now been three years since the U.S. stock market crash. Greenspan has indicated that interest rates could soon reverse their course, while longer-term interest rates have already moved higher. Higher interest rates should trigger a reversal in the housing market and expose the fallacies of the new paradigm, including how the housing boom has helped cover up increases in price inflation. Unfortunately, this exposure will hurt homeowners and the larger problem could hit the American taxpayer, who could be forced to bailout the banks and government-sponsored mortgage guarantors who have encouraged irresponsible lending practices." --> | ||
Thornton, Mark. 2004C. "[http://www.lewrockwell.com/thornton/thornton18.html A Bull Market in Gold — Technically Speaking]", March. <!-- "These trends are fundamentally based on the inflationary policy of the Federal Reserve, the deficit spending of the federal government, and the continued weakening of the US economy." --> | |||
Thornton, Mark. 2005A. "[http://www.lewrockwell.com/thornton/thornton27.html Is the Housing Bubble Popping?]" , August <!-- "the housing bubble might be coming to an end" --> | |||
Thornton, Mark. 2005B. "[http://www.lewrockwell.com/thornton/thornton29.html The Price of Gold: How High Can it Go?]", August <!-- what it says, predicting the rising price of gold --> | |||
Thornton, Mark. 2006. "[https://freecapitalists.org/journals/scholar/thornton13/ The Economics of Housing Bubbles.]", June <!-- America’s Housing Crisis: A Case of Government Failure, Benjamin Powell and Randall Holcombe, eds., Transaction Publishers - an extensive history of the housing bubble; predictions p. 27, 29, 31: construction industry, unemployment, foreclosures, bankruptcies, bailouts of banks and GSEs, a long recession --> | |||
Thornton, Mark. 2007A. [http://www.lewrockwell.com/thornton/thornton33.html "We Told You So"], March. <!-- richly illustrates the bubble and its causes --> | |||
Thornton, Mark. 2007B. "[http://www.lewrockwell.com/thornton/thornton32.html Illegal Immigrants and the Housing Bubble]", March. <!-- Links the bubble to illegal immigration: "Of course all of this will have to be undone because all bubbles eventually burst to one extent or another and all booms are eventually followed by "corrections" that drive whole economies, regions, and industries into economic slumps. A slump in construction will lead to unemployment and bankruptcies. In terms of immigrants we will likely see many return home, or turn up on government welfare roles — another legacy of the Greenspan Fed." --> | |||
Thornton, Mark. | Thornton, Mark. 2007C. "[http://blog.mises.org/6948/new-record-skyscraper-and-depression-in-the-making/ New Record Skyscraper (and depression?) in the making]", August <!-- links the coming economic downturn to the Skyscraper Index --> | ||
Thornton, Mark. | Thornton, Mark. 2007D. "[http://www.lewrockwell.com/thornton/thornton38.html You Heard It Here First]", August <!-- Notes a few previous predictions, also says the correction will probably be longer and more painful than most people expect.--> | ||
Trask, H.A. Scott. 2003. "[ | Trask, H.A. Scott. 2003. "[https://mises.freecapitalists.org/daily/1363 Reflation in American History.]" October 31 <!-- analyzes some bubbles in history and remarks the next one should be similar --> | ||
Wenzel, Robert. 2004. "[http://www.economicpolicyjournal.com/2008/07/government-isnt-god-fdic-sticks-banks.html Government Isn't God: FDIC Sticks Banks With Bad Loans and Sticks Borrowers With Subprime Junk.]" <!-- (2008 article refers to another [http://web.archive.org/web/20040816043836/www.economicbriefing.com/sabat/fedbubble.html archived] 2004 article) predicts people walking away from their houses; "when this growth in money supply begins to slow in earnest to under 5%, as the Fed slowly begins to raise rates, that you will see the real estate bubble begin to burst and then cascade downward." --> | Wenzel, Robert. 2004. "[http://www.economicpolicyjournal.com/2008/07/government-isnt-god-fdic-sticks-banks.html Government Isn't God: FDIC Sticks Banks With Bad Loans and Sticks Borrowers With Subprime Junk.]" <!-- (2008 article refers to another [http://web.archive.org/web/20040816043836/www.economicbriefing.com/sabat/fedbubble.html archived] 2004 article) predicts people walking away from their houses; "when this growth in money supply begins to slow in earnest to under 5%, as the Fed slowly begins to raise rates, that you will see the real estate bubble begin to burst and then cascade downward." --> | ||
Latest revision as of 04:21, 16 August 2026
During and after the burst of the Dot-com bubble, numerous Austrian economists predicted the 2000s housing bubble that culminated in the Great Recession from 2008 onward.
Summary
In 2002, Robert Blumen summed up the effect of the activities of Fannie and Freddie on the housing market as shows the systemic risk and foresaw a coming bailout.[1] Sean Corrigan pointed to the blooming real estate business among all the bankruptcies, and noted that real estate bubbles tend to pop several years after stock market bubbles, and that mortgages may fare much worse compared to stocks... along with their owners.[2] Congressman Ron Paul criticized government involvement in housing, and said that like all artificially created bubbles, the boom in housing prices cannot last forever.[3]
In 2004, Mark Thornton wrote that higher interest rates (indicated by the Fed) "should trigger a reversal in the housing market and expose the fallacies of the new paradigm, including how the housing boom has helped cover up increases in price inflation. Unfortunately, this exposure will hurt homeowners and the larger problem could hit the American taxpayer, who could be forced to bailout the banks and government-sponsored mortgage guarantors who have encouraged irresponsible lending practices."[4] Later on, he spelled out the consequences for the construction industry, unemployment, foreclosures, bankruptcies, bailouts of banks and GSEs, and a long recession.[5]
Stefan Karlsson wrote that the next crisis will be more serious than the mild recession of 2001 one; as it is, in fact, that very same crisis, only postponed.[6]
In 2005, Doug French after observing the mania in Vegas, quipped "condos are the last segment of the housing market to catch fire in a boom and the first to crater in a bust.", and concluded that the bust must be close.[7] Gary North warned against the danger of ARMs (adjustable rate mortgages).[8]
Investor Peter Schiff acquired fame in a series of TV appearances (most in 2006 and 2007), where he opposed a multitude of financial experts and claimed that a bust was to come.[9] He was warning about the speculation, ARMs, houses that couldn't be sold, people walking away from them and coming bailouts for several years before in print.[10][11][12]
Predictions
Prediction shortlist:
Anderson, 2001, 2003, 2007; Armentano, 2004; Beale, 2009; Blumen, 2002, 2004, 2005; Corrigan, 2002; Crovelli, 2006; DeCoster, 2003; Duffy, 2005A, 2005B, 2005C, 2005D, 2006, 2007A, 2007B, 2007C, 2007D; Economics of contempt, 2008; Englund, 2004, 2005A, 2005B, 2005C, 2005D, 2006, 2007, 2008; French, 2005; Grant, 2001; Karlsson, 2004; MacKenzie, 2003; Mayer, 2003; Mueller, 2004; Murphy, 2007, 2008; North, 2002, 2005; Paul, 2000, 2002; Polleit, 2006; Ptak, 2003; Rockwell, 2002, 2008; Rogers, 2005; Schiff, Undated A, Undated B, Undated C, Undated D, 2003A, 2003B, 2003C, 2004A, 2004B, 2005A, 2005B, 2005C, 2005D, 2006A, 2006B, 2006C, 2007A, 2007B; Sennholz, 2002; Shostak, 2003, 2005; Thornton, 2004A, 2004B, 2005A, 2005B, 2005C, 2006, 2007A, 2007B, 2007C, 2007D; Trask, 2003; Wenzel, 2004; See also Woods (2009, p. 188 for further bibliography).
Anderson, William L. 2001. "The Party is Over," February 20
Anderson, William L. 2003. "Recovery or Boomlet?" July 07
Anderson, William L. 2007. "The Party is Over – Again," August 30
Armentano, Dominick. 2004. "Memo to Federal Reserve: Increase Interest Rates Now!"
Beale, Theodore. 2009. "The Return of the Great Depression"
Blumen, Robert. 2002. "Fannie Mae Distorts Markets." Mises Daily, June 17
Blumen, Robert. 2004. "All Real Estate, All the Time". March 8
Blumen, Robert. 2005. "Housing Bubble: Are We There Yet?" May 8
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References
- ↑ Blumen, Robert. "Fannie Mae Distorts Markets", Mises Daily, June 17, 2002. Referenced 2011-01-10.
- ↑ Corrigan, Sean. "The Trouble with Debt", Mises Daily, July 01, 2002. Referenced 2011-01-10.
- ↑ Paul, Ron. "Testimony to U.S. House of Representatives", July 16, 2002. Referenced 2011-01-10.
- ↑ Thornton, Mark. "Housing: too good to be true." June 4, 2004. Referenced 2011-01-10.
- ↑ Thornton, Mark. "The Economics of Housing Bubbles", June 2006, p. 27, 29, 31. Referenced 2011-01-10.
- ↑ Karlsson, Stefan. "America's Unsustainable Boom", Mises Daily, November 8, 2004. Referenced 2011-01-10.
- ↑ French, Doug. "Condo-mania.", Mises Daily, July 11, 2005. Referenced 2011-01-10.
- ↑ North, Gary. "Surreal Estate on the San Andreas Fault.", November 25, 2005. Referenced 2011-01-10.
- ↑ Schiff, Peter. "Peter Schiff Was Right" (video). Referenced 2011-01-10.
- ↑ Schiff, Peter. "Fed official admits the emperor has no clothes!", Commentary, March 10, 2003. Referenced 2011-01-10.
- ↑ Schiff, Peter. "In Arm's Way: The Tender Trap of Adjustable Rate Mortgages.", Commentary, May 7, 2004. Referenced 2011-01-10.
- ↑ Schiff, Peter. "Housing Speculation is More Rampant Than You Think.", Commentary, July 5, 2005. Referenced 2011-01-10.
- ↑ Walter Block. Austrian Thymologists Who Predicted the Housing Bubble, LRC.com, December 22, 2010. Referenced 2011-11-29.