The crash of the housing bubble will not be pretty. Millions of people stand to lose their homes and life savings. However, it was inevitable. The bubble created a fantasy world that could not continue. At the peak of the bubble, 160,000 people a week were buying a home, most at bubble inflated prices. The longer the bubble persists, the larger the group of people who paid way too much for their home. While it is not good that so many dreams had to be ruined, the number will be even larger if the bubble deflates slowly. So I make no apologies about hoping for the hasty demise of the bubble.” Dean Baker, “Slow Motion Train Wreck” The American Prospect, Aug 2, 2006
You shouldn’t be surprised to learn the Bush administration’s proposal for an economic rescue is only 3 pages long. (I know you’re wondering if it’s written in crayon.) The proposal asks for carte blanche in spending billions of dollars. The only thing that has caught Bush and company off guard is the timing of the collapse. Dick Cheney expected this 2 years ago. He put his money into an inflation protected security fund and euros. Wall Street financed its own collapse and made billions while doing so.
Of course, the banks never would have exposed themselves to such extraordinary risk if they weren’t able to bundle-up these dubious loans and ship them off to Wall Street. Fund managers have been more than eager to take this “collateralized debt” and use it in the booming hedge fund industry. No one really knows what will happen to the stock market when foreclosures begin to skyrocket and the banks and hedge funds are unable to recoup their losses. But a major “correction” (meltdown) is certainly not out of the question.”
Bill Moyers interviews author Kevin Phillips, another visionary on the current crisis: