@VMD: I have been humbled with the ability of China to pour credit over markets if they foresee a slowdown. I am ascribing to Michael Pettis's view that China is in an unsustainable debt spiral, where there are no plausible investments that can repay the debt outstanding. If they "double-down" due to a housing crash or Europe-led recession, it will lead to even bigger problems down the road.

One important point is that the start of a housing crash can precede a "meltdown" by several years.

@fixie guy: "it was about his core beliefs on the nature of the business community and regulation. " Greenspan later has stated that some regulation is required, though I forget the context of his comments. It seems disingenuous and odd for him to claim free markets are best, then have a huge government-run0 liability in the form of mortgages carried at the GSEs; it seems more plausible to me he thought the moral hazard was acceptable because his macro theory — home ownership in net has goodwill — knew better than the micro was being run via free markets. Now flick the channel over to Canada and CMHC and the federal government have been embarking on similar mantra, that they want to support home ownership through access to low-interest fully-insured loans, and households have eaten them up. The one difference… Read more »

@patriotz: I'm not qualifying the act or the intended effect, just saying they tend to be pretty ineffective at changing behaviour as used.

@RippedtoShit:

In Oct 2008 – approx 1,000 (think max was 995)

In Jan 2009 after y/e expirarions – 600

In May 2010 – 750.

So – Looks like 1,000 is the number to beat. Not likely this year but perhaps in Spring if this year end does not go well.

@Bally:

Not sure we should say sales are up currently over last year. Over past 4 weeks, we're running approx 5% below last year on sales and 20% up on listings volume. Not quite a trend yet but we'll see where September takes us.

@jesse:

Partially true. North Van, Richmond have shown decreases since June while their MOI have gotten worse. Richmond has been bad for months but North Van has gone from very low to a balanced situation. Areas with biggest increases in Detached inventory are:

Van West/ Van East / White Rock / Burnaby – With the exception of White Rock -all of these are up more than 20% from June through September

@Bally:

It is higher than normal with only 2008 having a higher rate in the past 10 years.

@jesse:

The data they cited were showing economic results of mostly owner-occupied neighbourhoods were favourable to those with a high rate of renting. So to improve the plight of renters, why not make them owners?

Classic case of cart before horse. Pretending to live like a wealthy household does not make you one, it will only make you poorer. Home ownership will not change your financial circumstances. This can only happen by increasing your income or decreasing your expenses.

Or maybe just a case of tragically failed social engineering (is there any other kind?)

@107 jesse: 🙂 The big dichotomy, whether it's better to ascribe undesirable behaviour to a person's deficiencies or malfeasance. At least the latter's volitional.

Greenspan may have been naive, but his own latter admissions suggest it was about his core beliefs on the nature of the business community and regulation. Some the more fiscal-religious were literally advocating that in an ideal unregulated market malfeasance was almost mathematically impossible because the market would drive wrongdoers out. None of them thought that entire markets could follow if the money on the line was big enough. Some would argue it was their 'fiduciary duty' to get on the gravy train. That's an even scarier possibility.

@fixie guy: I agree re financial corruption but Greenspan seemed to believe his own mantra about home ownership (improper risk allocation in mortgages). I could believe that alone would justify the means he advocated.

I would almost prefer he saw the endgame of feeding the finance industry trough and used home ownership as a guise because it means the Beltway wasn't fooled by his cover story. I think the truth is more disturbing, that he was pedagogical and resistant to alternate viewpoints due to his influnces in his youth. That he and his flawed philosophies were allowed so much rope speaks to something far more sad about America's political discourse.

@ jesse: That reasoning has a mortal flaw. Greenspan was local, the bubble was global: http://en.wikipedia.org/wiki/Real_estate_bubble#R… Were all the result of similar humanitarian policies? Independent, unrelated and coincidental? Or reactive policies based on the belief it enhanced global competitiveness? The US fed was stimulating the largest growth area of their economy, the financial sector. The regulatory structure in the US was controlled by members culled from that industry who would return to it. It's been described as a revolving door. You can gauge the extent to which benefiting the poor and disadvantaged was the prime goal by examining where so many fingers immediately pointed (especially on the Right who authored this bubble) when it all went to shit: the defaulting poor and disadvantaged. I don't think it's a coincidence one of the last countries still pumping real estate – Canada… Read more »

@fixie guy: That is really at the heart of what drove this, IMO. Greenspan phrased it differently, that lenders were mispricing risk because the data he had showed that owners were on average less risky than the borrowing rates indicated. Why was this he argued? One, ownership reduces credit risk due to hand wavy pride and responsibility, two, this was a case of the micro not getting the macro (sounds familiar to what many think Keynes stated). Ergo rising house prices and GDP growth were justified. He may have thought that incomes would eventually rise with a lag to justify the higher prices, though I doubt it. Where Greenspan erred was failing to link prices and rents/incomes, and accounting that an asset bubble was another potential logical outcome to his advocated policies. An absolutely horrible risk manager and history has… Read more »