Reply #4: No, this disaster had roots that were spreading quickly. Homeowners had been getting [View All]

[Mike 03]

into increasingly severe trouble for a couple of years, and Bear Stearns failed in spring of last year, I think. Those were two "shots across the bow." But the truth of the matter is that many economists have been scared shitless for a number of years as our account deficit has been growing exponentially since 2001. There is plenty of documentation thanks to the WWW. Also, a number of important books were published in the early 2000s that warned of precisely this scenario. I even believe that Krugman has been ringing to gong for years. So have the analysts at Prudent Bear, PIMCO, Franklin funds, and quite a few others. Steven (or Stephen) Roach at Morgan Stanely has been screaming about this since 2002.

ON EDIT: What am I saying? Greenspan warned about this back in the 90s. Once it was clear that the dot.com crisis was a bubble that had moved to the real estate market, and that lax lending policies were permitting people who had no business owning hopes to buy them, this scenario was set in stone. It was also Greenspan's fault for lowering interest rates to almost nothing. Money was too easy.