tag:blogger.com,1999:blog-1110014885778996459.post5253552429799909538..comments2024-03-28T01:12:29.954-07:00Comments on Idiosyncratic Whisk: There was no housing bubbleKevin Erdmannhttp://www.blogger.com/profile/07431566729667544886noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-1110014885778996459.post-75429181970054775432013-08-18T16:36:04.930-07:002013-08-18T16:36:04.930-07:00Thanks for the link, Andy. That was an interestin...Thanks for the link, Andy. That was an interesting post with some great comments.<br /><br />There are enough interesting questions here to keep someone busy for a lifetime. It's unfortunate that public discourse about finance so frequently stops at the easy stories of ignorant greed and fear and of cons and marks.<br /><br />Your point about international savings glut is a good one too. I did a recent post relating to that:<br />http://idiosyncraticwhisk.blogspot.com/2013/08/stop-hatin-on-trade-deficit-aka-america.html<br /><br />There is an interesting story here about comparative advantage, not just in production, but in risk. It seems like the US has developed a standing as the superior producer of low risk or risk free securities. It turned out that some of those securities had more risk than the investors had bargained for.<br /><br />Foreign investors could get easy exposure to Treasuries and housing securities, pushing Americans into the real estate itself, in pursuit of a savings vehicle.<br /><br />It seems like American corporations are serving as a sort of financial intermediary, collecting savings in the low risk US context and investing it in high risk emerging markets.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-19178168002527776062013-08-18T08:39:20.287-07:002013-08-18T08:39:20.287-07:00I made a somewhat similar point a few years ago.
...I made <a href="http://blog.andyharless.com/2010/08/what-housing-bubble.html" rel="nofollow">a somewhat similar point</a> a few years ago.<br /><br />I didn't deal specifically with the reasons for the high demand to save. I'm not convinced it was all about demographics. Another factor (which is apparently no longer present) was the savings glut coming out of East Asia, partly as a result of Chinese government policies.Andy Harlesshttps://www.blogger.com/profile/17582263872850949568noreply@blogger.com