As Bruce Willis said in the film Die Hard, “Welcome to the party, pal!”
The US government and financial institutions created a staggering 1-4 unit mortgage credit bubble starting in 1995 with Clinton’s National Homeownership Strategy, a 100-point action plan that put as its overarching goal achieving an “all-time high level of homeownership in America within the next six years.” nhsdream2
Well, the US homeownership rate peaked at 69.2% in 2004, but has fallen to a level lower than where Clinton started.
1-4 unit mortgage debt outstanding grew a staggering rate from 1995
We all know how this ended. A massive home price bubble that collapsed, spreading pain through households and the financial system.
Of course, Europe experienced a burst in mortgage lending as well. That also ended badly. Throw in the Greek credit crisis, and … kaboom.
Deutsche Bank’s stock price has declined 88% since June 2007. But the other big German bank, Commerzbank, fell 97% over the same period.
Italy’s Banca Monte Dei Pascha has declined 99.76% since June 2007 to finish second in terms of losers. The biggest loser? The Bank of Greece at -99.99%.
The reaction from the Bank of England and the European Central Bank? Follow the Fed down the path of zero interest rate policy. Where they all remain today. And European banking stocks remain in the toilet.
Here is a gyro meat cone representing how taxpayers will be called on to bail out these gyro’d banks.
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