On Aug 29, 2011, at 5:18 PM, SA wrote:
> If the causes of the housing bubble were so contingent and specific, why have there been so many other credit-fueled property bubbles throughout history? In the Panic of 1837 there were no CDOs, MBS, S&P/Moody's, zoning laws, etc, but the basic story was the same. That's why I'm dissatisfied with attempts to explain the bubble by pointing at contingent details like those, either singly or combined. They're just the Bush-era epiphenomenal manifestations of deeper underlying processes that have repeated themselves throughout the history of capitalism.
I'd agree with this - the fancy instruments were just a modern variation on an old story: there are endless amounts of cheap money available to finance a bubble, until there isn't. The institutional details vary, but that core is always there.
As for the specific housing bubble, I think another angle is that after the collapse of the dot.com thing, houses seemed so secure. You can touch them, unlike the discounted value of Pets.com's future profits.