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Blowing Bubbles: The 2008 Mortgage Crisis

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Publication Date: January 2008

Publisher(s): Hoover Institution on War, Revolution, and Peace

Author(s): Richard A. Posner

Series: Hoover Digest

Topic: Economics (Economic policy, planning, and development)
Social conditions (Housing)

Keywords: Mortgage Crisis; Economy

Type: Report

Coverage: United States

Abstract:

Intelligence failures, the two "bubbles" (housing and investment), whether the parties involved were "ignorant or caluculating" in their investing, and the psychology that leads to behavior that often deviates from simple models of rational choice. Posner states that there will always be housing bubbles, and states that bailing out the buyers would set the stage for a future housing bubble. His concluding opinion is that there is nothing to be done.