This IGM poll of leading economists on the importance of various factors in the financial crisis of 2008 provides interesting results. The poll lists 12 factors, and all of them receive at least some positive weight. In fact, this under-estimates the complexity of the causal mechanisms, because some of the factors are themselves multi-faceted. For example, the first factor, “flawed financial sector regulation and supervision,” could mean many different things to many different people. It could mean the repeal of Glass-Steagall (a favorite among non-economists on the left) or it could mean the Basel accords (one of my personal favorites).
Overall, I think it vindicates the broad, multi-causal approach that I took in Not What they Had in Mind.
I think the most interesting part of the list is what isn’t on it. For instance, “household net worth suddenly dropped 15%” would seem to be a factor that far outweighs any of the listed factors. This seems to not be on the list because it is presumed to have been inevitable, or a “correction”. The proper answer to the poll is that “economists thought and think a 15% drop in net worth shouldn’t be on the list” gets a 5 and everything else gets something between a minus 3 and a 2.
I still have not seen anything as simple as the US housing market in general had a 50+ year relative Bull market and was due for a big fall. In terms of individual government (state or Federal) there has been housing boom and bust in almost all other developed nations so why would the US be any different.
ACE
Beginning and end of story on the real estate end.