In Tom Woods’ Meltdown, he chides conservatives who try to blame the housing bubble solely on the Community Reinvestment Act and other such particular interventions. Woods argues that only the Federal Reserve could explain the general booms (and hence busts) in market economies, and that without the Fed’s easy policies after the dot-com crash, there couldn’t have been a sustained and massive housing bubble.
Of course Paul Krugman would disagree with Woods’ conclusion, but in this post he also rules out two of the typical fall guys in the conventional “right/left” debate. After displaying a graph showing that the housing and commercial real estate bubbles overlapped very closely, Krugman says:
From my perspective, the CRE bubble is highly significant; it gives the lie both to those who blame Fannie/Freddie/Community Reinvestment for the housing bubble, and those who blame predatory lending. This was a broad-based bubble.
