John Cole, at Balloon Juice, picks — out of a story in the Wall Street Journal — one paragraph that "really seems to be the best one paragraph description I have seen of what we are currently experiencing" with the economy.
That's great news for me, because one paragraph is about as much of an article on the economy as I can get through without cutting myself…
The 2001 recession might have ended the bubble, but the Federal Reserve decided to pursue an unusually expansionary monetary policy in order to counteract the downturn. When the Fed increased liquidity, money naturally flowed to the fastest expanding sector. Both the Clinton and Bush administrations aggressively pursued the goal of expanding homeownership, so credit standards eroded. Lenders and the investment banks that securitized mortgages used rising home prices to justify loans to buyers with limited assets and income. Rating agencies accepted the hypothesis of ever rising home values, gave large portions of each security issue an investment-grade rating, and investors gobbled them up.
Hey! I almost understood that!
I must be getting slightly less dumb.
Tags: Bill Clinton, Economy, George W. Bush, Recession