Malinvestments, Predatory Lending, and Demagogues

Mish has a great quote from Carol Baum 's column :

"We've created an unproductive asset," says Joe Carson, director of global economic research at AllianceBernstein. "A house doesn't produce income." Mortgage debt rose by $4.7 trillion from the end of 2000 through the third quarter of 2006, according to the Fed's Flow of Funds report. "We created as much debt in housing in the last six years as we did in the prior 50," Carson says.

The Fed plus Fannie plus the real estate lobby plus state and local government's encouraging higher and higher real estate prices.