The housing crash, currently in its infancy, will soon grow up into an economy killing monster that the Federal Reserve has no weapon strong enough to defeat. A housing crash is unlike a stock market crash in that there is no easy way out.
Let’s take a walk back in time to the tech stock crash just 8 years ago and compare it to a housing crash.
The tech stock bubble crashed in the spring of 2000 and the Fed then went on a rate cutting spree ending in June of 2004. The Fed dropped rates something like 15 times to stave off recession. The tech stock bubble and crash could be managed said the Fed with an increase in liquidity to the economy in the form of cheaper money. The banking industry helped him out by offer anyone with a pulse a mortgage flooding the economy with even more money.
And it worked…or did it?
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