Of course many Americans knew deep down (and not so deep down) that there ain't no such thing as a free lunch. But what is worse is that the people "in charge" gladly rejected that old fashion notion in favor of the cockamamie idea that we had somehow entered a new golden age of burst-resistant bubbles. Forget the fact that anyone over the age of 20 can remember the 90s tech bust. But hey, that was tech, the 2000s are all about real estate and what is safer than houses?
I am certainly not an economic historian. But I do read a lot of fiction. Last night I picked up The Ice Age by British author Margaret Drabble and was startled by a scene in the early pages of the novel. Published in 1977, the book describes the protagonist's unfortunate run-in with a housing bubble.
"He had bought the house at the top of the market, and suddenly, overnight, the property market collapsed...The collapse had been dramatic...What happened to those spectacular profits? Why had all the confident experts been so taken by surprise? Anthony had been seduced and corrupted by these confident experts into believing that profits would go on multiplying forever, unlikely though that had always seemed. Go for growth, had been the slogan, and everybody had gone for it. Now some were bankrupt, some were in jail, some had committed suicide, and only the biggest had survived unscathed. Casualties of slump and recession strewed the business pages of the newspapers, hit the front page headlines. Old men were convicted of corruption and hustled off to prison, banks collapsed, and shares fell to nothing."
With the exception of the corrupt old men going off to prision (not enough of that yet), this could have been written last week, not 32 years ago.
N.B.: When looking around online I came across this great posting over at splicetoday.com where Phyllis Orrick referenece pretty much the same passage. Although she beat me to punch having posted hers in February. We even have the same cheesy paperback copy!