Tuesday, April 08, 2008

Why I Love the Blogsphere

by Ken Houghton

Consider this the counterpoint to yesterday's "they played without me" post.

Every once in a while, there is a statement that is so egregiously offensively wrong that it demands a blogspot. But, since after today I have something in common with Barkley Rosser's eldest daughter, I'm buried.

Fortunately, Felix came through with bells on.*

The statement, by the way, is:
Some argue that adjustable rate mortgage (ARM) originations fueled the bubble. Yet the ARM's share of total originations is a very weak forecaster of home prices, implying ARMs, although a source of cheap financing, are not a determinant of home prices. If ARMs were not available from 2001 to 2004, home purchases presumably would have been financed with long term debt, which was also very affordable.

You can guess the source.

*The only thing he leaves out is that Alan Greenspan himself encouraged people to take out ARMs, just as he started tightening. Of course, as with Himself being 100% in bonds (at his age) in 1996, just before he started loosening, this is purely coincident.

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