Sunday, May 17, 2009

U.S. Subprimes Not the Whole Story

An interesting graph published by Rebecca Wilder, a financial economist, on her blog News N Economics (May 16).

What strikes me is that contrary to what many observers write, the housing boom and crisis does not appear to have begun first in the U.S., and the housing price inflation has hit earlier and stronger Ireland, Britain, and Spain. Moreover, since the housing crisis has also been but only a part of asset markets general bubbles and crashes, it seems difficult to assign the main responsibility for the current worldwide recession to the American subprime subsidy policy and subsequent mess.

More fundamental phenomena are at play.

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