Re:‘Housing in ‘07 wasn’t a bubble” is a true statement that...
by danaris on Friday April 08, 2022 @09:34AM
(#30956598)
But it was guaranteed to pop, because of the fundamental unsoundness of it.
Like aeternum said, it was only viable as long as prices kept increasing. Any kind of shock to the system would cause a wave of defaults.
And because of the bundling and spreading out of the CDOs based on these unsound mortgages, it essentially infected the entire system, meaning that that wave of defaults wouldn't just affect the real estate lending sector.
So, sure, in an imaginary world where house prices could monotonically increase forever, we could choose not to call this a bubble. But it really is just that: imaginary.
Like aeternum said, it was only viable as long as prices kept increasing. Any kind of shock to the system would cause a wave of defaults.
And because of the bundling and spreading out of the CDOs based on these unsound mortgages, it essentially infected the entire system, meaning that that wave of defaults wouldn't just affect the real estate lending sector.
So, sure, in an imaginary world where house prices could monotonically increase forever, we could choose not to call this a bubble. But it really is just that: imaginary.