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Prelude to the crisisEdit
Banks increasingly had the incentive to make long-term amortizing loans secured by long-term assets because the threat of bank runs has been taken away by increases in FDIC deposit insurance. Deposit insurance started at $2,500 in the Great Depression and has increased in fits and starts to $250,000 in 2009. With the increase in deposit insurance there is no need to maintain liquidity. So instead of making short-term, self-liquidating business lines of credit, bankers opted for making real-estate loans.
Numbers from the FDIC reflect this shift over the past decade. At the end of the third quarter of 1999, the assets of the nation's banks totaled $5.5 trillion. As of September 30 2009, bank assets had grown to $13.2 trillion. Commercial and industrial loans outstanding only grew from $947 billion a decade ago to $1.27 trillion by September 30, 2009. Meanwhile, loans secured by real estate increased from $1.43 trillion in the fall of 1999 to $4.5 trillion in 2009. And investment in securities doubled, rising from $1.03 trillion to $2.4 trillion.
Finance was once just a small portion of the US economy, but by 2007 it had mushroomed into being over a quarter of the S&P 500, after being only 5 percent of the index back in 1980 — and this doesn't count the financial affiliates of companies like GE. Finance is the largest sector of the US economy, so college graduates believe the road to riches lies with pushing paper, creating complex financial securities, and jockeying risk-management models.
These products served to grow Wall Street exponentially. All stocks in the S&P in 1957 had a market value of $220 billion. By the end of 2008, that index had a value of $9 trillion, but the real action was in derivatives, which totaled $518 trillion that year, "or about ten times the Gross Global Product." Credit Default Swaps owners jumped on this opportunity to profit and the CDS market grew to $62 trillion at its peak, while the entire market for home mortgages was only $12 trillion. Sold as an insurance to hedge against credit risk, the CDS market morphed into speculation.
The Washington Post has called the 2000s "The lost decade". "The U.S. economy has expanded at a healthy clip for most of the last 70 years, but by a wide range of measures, it stagnated in the first decade of the new millennium. Job growth was essentially zero, as modest job creation from 2003 to 2007 wasn't enough to make up for two recessions in the decade. Rises in the nation's economic output, as measured by gross domestic product, was weak. And household net worth, when adjusted for inflation, fell as stock prices stagnated, home prices declined in the second half of the decade and consumer debt skyrocketed."
Predicting the crisisEdit
"...the notion of a bubble bursting and the whole price level coming down seems to me as far as a nationwide type of phenomenon really quite unlikely."
Federal Reserve Chairman Alan Greenspan, 2003.
A common view from the very beginning of the credit crisis, shared from the upper echelons of the global financial and policy hierarchy and in academia to the general public, was that, ‘no one saw this coming’. However, several economical analysts warned specifically about a housing-led recession, going against the general mood and official assessment, and well before most observers turned critical from late 2007.
Psychology clearly plays a role in stimulating a bubble, but only monetary inflation enables it. It is difficult not to succumb to the temptation of astronomic profits in a short period of time. Resistance is even more difficult if the means to engage in the bubble are easily available at the nearest bank.
Former Fed chairman Alan Greenspan would suggest that "irrational exuberance" has the power to escalate asset prices. He could certainly claim exuberance, but there is nothing irrational in investing in higher-yield projects instead of watching your idle savings lose their purchasing power because of inflation.
With extremely low nominal interest rates and negative real interest rates (inflation is estimated at over 10% for 2007 and 2008), the rational behavior was to borrow and invest wherever it is possible. A booming real-estate market seemed to be the obvious choice most of the time. Under these conditions, everyone becomes a brilliant businessman. Entrepreneurial errors seem seldom while credit is abundant.
In the case of the housing sector, people failed to understand that demand for real estate is only sustainable if the ultimate reason for purchasing a property is to actually reside in it. Only savings can allow for sustainable economic growth. Through inflation, credit flows excessively and distorts the production structure, allocating resources to projects that should have never existed in the first place and paving the way for the ensuing recession, that is, the adjustment of all the malinvestments. Entrepreneurs can and will make mistakes even in the absence of inflation. But it is only through undue monetary expansion that the distortion occurs on a massive scale throughout the economy.
Production and saving cannot keep up with the pace of credit expansion, because production takes time and labor. The creation of additional money out of thin air does not add to the available amount of goods and services in the economy. If more credit is extended to construction companies, it does not mean there will be enough steel, cement, etc. — certainly not at prices that make the developments profitable. As soon as each company starts bidding for the same resource, it will tend to increase in price, rendering some projects unviable. Resources are scarce. Printing more money can never alter this fact.
Government intervention in the housing marketEdit
Government policies intended to promote home ownership, even by people otherwise not able to afford it, date back to the 1930s if not before. Today, many government agencies and government-sponsored companies guarantee or subsidize mortgage loans, either directly or by providing a secondary market. Examples include the Federal Home Loan Banks, the Federal Housing Administration (FHA), the Government National Mortgage Association (GNMA, "Ginnie Mae"), and the Department of Agriculture's Rural Housing Service and Rural Development Guaranteed Loan Program. Some programs aim to make housing more affordable for particular groups, including military veterans, police officers, teachers, and Native Americans.
Some programs have forged strong links with politicians. The Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac), both government sponsored, have been particularly notorious, enjoying cozy relations with members of Congress and an implicit (later explicit) government guarantee of their bonds.
Several much-discussed laws and regulations, including the Community Reinvestment Act of 1977 and its sequels, pressured financial institutions to make mortgage loans to normally unqualified borrowers, and even to make them in parts of cities where a prudent person would hesitate to walk. Lenders have also been pressured to grant relief to troubled mortgage debtors.
It is not obvious that homeownership is unequivocally desirable. Owning a house puts friction in the way of the owner's moving to a place where he could have a better job. The owner carries the burdens of maintenance, landscaping, and finding plumbers and other repairmen when emergencies arise. These burdens might be left in the first place to managers of rental properties, who would take advantage of professionalism, risk-spreading, and economies of scale. Yet government has gone to remarkable lengths in obeisance to "the American dream."
Tax laws have long privileged owner occupancy over renting. Homeowners may deduct mortgage-interest payments and real-estate taxes in figuring their federal income taxes, and they enjoy favorable tax treatment of gains on the sale of their houses. Federal tax law permits state and local government agencies to offer below-market-rate financing to homebuyers. Owners enjoy tax-free nonmonetary income (implicit rental income) from occupancy of their homes, whereas landlords pay tax on their rental income and pass it and the property tax along to their tenants.
Such policies have effects. Cheap credit during the years of the boom compounded the long-term effects of government action. As one would predict, cheap credit encouraged borrowing, building construction, and bullish speculation in houses. Even financially unqualified homebuyers took advantage of dubiously attractive subprime mortgages, mortgages whose initial teaser rates could later be raised, loans requiring no payment of principal during the early years, and even negative-amortization loans.
Some borrowers and mortgage brokers connived to conceal applicants' inability to meet even the loosened financial standards. Borrowers and lenders were seduced by expectations that the collateral — houses — would keep rising in price indefinitely. Low interest rates spurred savers and institutions to look for better yields even on new or exotic and riskier kinds of investment. Financiers reached for these yields, resorting to complicated and poorly understood financial derivatives and making defective assessments and unclear explanations of risks.
An advanced economy is a tissue of intricate interdependencies whose unraveling damages finance, production, employment, and consumption. Contagion particularly bedevils financial intermediation, which is the business of banks and other financial firms and the stock market. Lending institutions borrow, normally at shorter-term and lower rates of interest, to relend at higher rates. Banks, for example, owe short-term debt to their depositors and use the funds for medium- and long-term loans and securities.
Financial intermediation tailors types, maturities, and risk/reward characteristics of financial instruments to meet the desires both of ultimate savers and of borrowers and stock-issuing firms. In an advanced economy, this intermediation is essential to channel savings efficiently into factories, farms, machinery, and other capital goods, so promoting economic growth.
By its very nature, intermediation requires firms performing it to operate heavily with borrowed funds. Their excess of assets over liabilities — their capital in this accounting sense (net worth) — amounts to only a very small percentage of either. Even ordinary businesses use borrowed funds to some extent; but financial firms practice this leverage, so called, to a more extreme degree. Their capital, a small percentage of their balance sheets, is vulnerable to being wiped out.
Securitization means bundling loans into packages that provide the backing for bonds issued by the bundlers. Ideally, these "collateralized debt obligations" enable their buyers to enjoy the convenience of not making individual mortgage loans and also, normally, the relative safety of diversification. The bundlers receive their shares of these benefits from an interest-rate spread between what they earn on the loans and what they pay on their own obligations.
The process can be carried to further stages as the first-level bonds are cut into "tranches" according to the estimated riskiness of their backing. The different tranches can then serve as backing for a further level of bonds, and even further levels. The results are called CDO2s (collateralized debt obligations squared). Many of them received the highest ratings by the three government-privileged bond-rating companies, S&P, Moody's, and Fitch, so becoming approved holdings even for conservative investors such as pension funds, and building confidence among other investors also.
Yet these ratings, especially of unfamiliar debt instruments, proved overoptimistic. At the beginning of the chain, some of the underlying mortgage borrowers may not have been creditworthy — and in recent years, many of them certainly were not. While the process may achieve the apparent safety of diversification, it also makes risk assessment more difficult and obscures how participants along the chain share the risk of default on the underlying mortgages. Unforeseen defaults can spread and magnify damage along the whole ingenious chain.
Credit-default swaps can be described as an insurance that investors buy to compensate for a loss if a particular debtor defaults on its obligation (a loan, mortgage, government debt, etc). The investor pays the CDS spread (the "insurance premium") and if the debtor defaults on its debt, the investor receives the insured sum. The CDS spreads indicate the confidence in the underlying bond.
Investors can buy CDSs even if they do not own any debt from the company that they refer to. These are the infamous naked credit-default swaps (already banned in Germany, there are plans to extend this ban to the rest of the EU). From a free-market point of view, betting on defaults of financial institutions is as legitimate as betting against a certain soccer team in the World Cup.
Generally, the option of insurance means more certainty and that people will be more eager to lend money. However, if many are buying a specific "insurance", it will increase the spreads,and indicate distrust of the market. The institution in question may find it hard to borrow more money (this in fact happened to the banks from Iceland, and led to higher interest rate payments for the Greek government). Speculators can in this way warn the public that a company - or a government - won't be able to pay its debts. They may also bring about the collapse of unstable companies sooner. The default-swap issuer can also go broke - and with greater likelihood than a regular "insurer", because of the relative complexity and novelty of the transactions. For an example see the insurer AIG, which had to be rescued by the government. (As Treasury Secretary Timothy Geithner said: "Despite regulators in 20 different states being responsible for the primary regulation and supervision of AIG’s U.S. insurance subsidiaries, despite AIG’s foreign insurance activities being regulated by more than 130 foreign governments, and despite AIG’s holding company being subject to supervision by the Office of Thrift Supervision (OTS), no one was adequately aware of what was really going on at AIG.")
The whole tissue of economic interrelations rests on trust. Confidence can be justified, excessive, or abnormally weak. Confidence can rise or fall in waves of herding: understandably, people without enough information to make judgments on their own regard others' behavior as guided by information that they possess. A boom reinforces confidence. People are inclined to fall for dishonest schemes. A bust saps confidence. People and institutions, including banks, become more cautious in doing business with one another.
The stock market, swinging widely, both registers and magnifies the state of confidence or fear. Loss of stock and house values makes consumers hesitant to spend money, depriving businesses of sales in a further fall of dominos.
Moral hazard is a danger: past rescues breed expectations of more in the future. So soothed, firms run greater risks than would otherwise be prudent (just as fire insurance soothes homeowners to be less obsessively cautious than they would be without it). Against a long background of bank and hedge-fund rescues, the rescue of Bear Stearns in March 2008 further bolstered expectations. These were disappointed when Lehman Brothers was allowed to fail in mid-September. The crisis deepened, arousing hopes that the authorities had learned a lesson and would not allow a similar major collapse. The economy faces a catch-22: damned by immediate damage if a rescue goes unattempted, and damned by the longer-run moral hazard if a rescue is undertaken.
Moral hazard presents a major short-run versus long-run contrast. Rescue of a troubled bank may seem the best thing to do immediately, but it reinforces expectations of further rescues, inviting repeated trouble later.
The December 2009 regular survey on Small Business Economic Trends by the NFIB showed that capital expenditures and near-term plans for new capital investments remained stuck at 35-year lows. The same survey revealed that only 7% of small businesses saw the next few months as a good time to expand. Only 8% of small businesses reported job openings, as compared to 14%-24% in 2008, depending on month, and 19%-26% in 2007. The weak economy was the most prevalent reason given for why the next few months are "not a good time" to expand, but "political climate" was the next most frequently cited reason, well ahead of borrowing costs and financing availability. The authors stated: "the other major concern is the level of uncertainty being created by government, the usually source of uncertainty for the economy. The 'turbulence' created when Congress is in session is often debilitating, this year being one of the worst. . . . There is not much to look forward to here."
Business investment in the third quarter of 2009 was down 20% from the low levels a year earlier. Job openings were at the lowest level since the government began measuring the concept in 2000. The pace of new job creation by expanding businesses was slower than at any time in the past two decades and, though older data are not as reliable, likely slower than at any time in the past half-century. While layoffs and new claims for unemployment benefits have declined in recent months, job prospects for unemployed workers have continued to deteriorate. The exit rate from unemployment was lower now than any time on record, dating back to 1967.
According to the Michigan Survey of Consumers, 37% of households planned to postpone purchases because of uncertainty about jobs and income, a figure that has not budged since the second quarter of 2009, and one that remained higher than any previous year back to 1960. In 2009, companies were holding more cash — and a greater percentage of assets in cash — than at any time in the past 40 years.
The chairman of China’s sovereign wealth fund said in late 2008 that China had no plans for further investments in Western financial institutions. "Right now we do not have the courage to invest in financial institutions because we do not know what problems they may have." Mr. Lou said that the sheer pace of new initiatives and new rules issued by Western regulatory agencies was disconcerting and made it even harder for him to choose worthwhile investments. "If it is changing every week, how can you expect me to have confidence?" he asked.
The chairman of the Business Roundtable, an association of top corporate executives that has been President Obama's closest ally in the business community, accused the president and Democratic lawmakers in June, 2010, of creating an "increasingly hostile environment for investment and job creation." ... "By reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses."
- Main article: Regime uncertainty
Burst of the bubbleEdit
Some consider the bankruptcy of Lehman Brothers to cause the financial panic of late 2008. According to others, the main risk indicators only took off after Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke's TARP speeches to Congress on Sept. 23 and 24.
Still others point out, that the previous bailouts (esp. Bear Stearns in March 2008) produced in the markets an expectation, that the government will bail out large financial institutions and its decision to let Lehman Brothers to fall has surprised and shocked them. (It has been noted, however, that there is a significant relationship between lobbying and bailout money, as well as a greater chance of getting bailouts depending on a bank’s ties with either the Federal Reserve or key members of Congress.)
Total employment peaked in 2007 at 137.6 million persons on nonfarm payrolls, fell slightly in 2008, and then dropped precipitously in 2009 to 132.0 persons, for a two-year loss of 5.6 million jobs. In 2009, total employment was approximately equal to its magnitude in 2001, even though the labor force had grown substantially in the interim.
The loss of employment has occurred entirely in the private sector: employment fell from 115.4 million persons in 2007 to 109.5 million persons in 2009, a decline that took private employment back to its level at the end of the 1990s. As private employment has collapsed since 2007, however, the government payroll has actually grown slightly from 22.2 million persons in 2007 to 22.5 million persons in 2009, which puts this class of employment roughly 1.7 million persons above its magnitude in 2000.
The government employees also enjoyed increased compensation. The growth in six-figure salaries has pushed the average federal worker’s pay to $71,206, compared with $40,331 in the private sector.
This situation bears a resemblance to the employment situation during the Great Depression, when private nonfarm hours worked fell steeply from 1929 to 1932 and did not get back to the 1929 level until 1941, notwithstanding (or perhaps because of) the millions of persons added to government payrolls during the New Deal period. In both cases, the possibility that government employment crowds out private employment, rather than stimulating it, cannot be dismissed out of hand.
The 2000s may prove to have been America’s second "lost decade" (the 1930s having been the first), an interval of little or no net economic gain, owing to destructive government policies that produced only unsustainable booms followed by inevitable busts, along with such huge, frequent, and unsettling changes in government policies that private planning, especially for long-term investment, has become too risky for private investors to bear — a situation called regime uncertainty.
After the fallEdit
Since the summer of 2008, the U.S. Treasury and the Fed initiated a new wave of spending, lending, and subsidizing programs ostensibly aimed at stemming the recession that began early in that year and deepened quickly in its last quarter and in the first quarter of 2009. Among the most notable of these programs have been attempts to prop up the real estate market and the residential construction industry, where the Fed’s easy-money policies in the first half of the present decade induced lenders to make millions of mortgage loans to home buyers who would not have qualified for such loans if traditional underwriting standards had been applied.
Rather than terminating the government policies that had encouraged the foolish behavior of real estate buyers, sellers, and lenders, the government has undertaken to continue and even to compound the selfsame policies that in large part caused our present economic troubles. For example, Fannie and Freddie, now effectively government owned and operated firms, continue to extend loans as if promising borrowers were superabundant.
Moreover, the Federal Housing Administration, a government agency created in 1934 to insure conventional mortgage loans, has greatly expanded the volume of its business, and according to a report in the New York Times, the FHA "is underwriting loans at quadruple the rate of three years ago even as its reserves to cover defaults are dwindling." The Mortgage Bankers Association affirmed on November 19, 2009 that "more than one in six F.H.A. borrowers was behind on payments." The FHA has backed 37 percent of all residential mortage loans made in 2009. Reporter Patrice Hill observes that "these loans are exposing taxpayers to the same kinds of soaring default rates and losses that brought down Fannie Mae and Freddie Mac as well as destroyed many banks and the private market for mortgage loans."
Households across a majority of large U.S. cities received more foreclosure warnings in the first six months of 2010 than in the first half of 2009. In all, 154 out of 206 metropolitan areas with at least 200,000 residents posted an annual increase in foreclosure activity between January and June. The threat of foreclosures is spreading well beyond the top tier of metropolitan areas located in California, Florida, Nevada and Arizona, which have borne the brunt of the fallout from the housing crisis. "The face of foreclosure is driven much more now by unemployment than in the past," said the speaker of a foreclosure listing firm. The number of households facing foreclosure in the first half of the year climbed 8 percent versus the same period last year, but dropped 5 percent from the last six months of 2009.
Impact on InvestmentEdit
In 2006, gross private domestic investment reached its most recent peak, at $2.33 trillion (in constant 2005 dollars), or 17.4 percent of GDP. After remaining almost at this level in 2007, this measure of investment fell substantially during each of the next two years, reaching $1.59 trillion, or 11.3 percent of GDP, in 2009.
The greater part of gross investment consists of what the statisticians call the capital consumption allowance, an estimate of the amount of money that must be spent simply to offset wear and tear and obsolescence of the existing capital stock. In a country such as the United States, with an enormous fixed capital stock built up over the centuries, a great amount of funds must be allocated simply to maintain that stock. In recent years, the private capital consumption allowance has ranged from $1.29 trillion in 2005 to $1.46 trillion (in constant 2005 dollars) in 2009. Thus, even in the boom year 2006, about 60 percent of gross private domestic investment was required merely to maintain the economy’s productive capacity, leaving just 40 percent, or $889 billion in net private domestic investment, to augment that capacity.
From that level, net private domestic investment plunged during each of the following three years, taking the greatest dive between 2008 and 2009, when it fell to only $54 billion (in constant 2005 dollars), having declined altogether by 94 percent from its 2006 peak! Only 3.5 percent of all private investment spending in 2009 went toward building up the capital stock. Thus, net private investment did not simply fall during the recession; it virtually disappeared. Without substantial net private investment, brisk economic growth is unthinkable beyond the very short run.
- ↑ Zuckerman, Mortimer. "Mortimer Zuckerman: The Great Recession Continues - WSJ.com", The Wall Street Journal, referenced 2010-07-23.
- ↑ Evans-Pritchard, Ambrose. "With the US trapped in depression, this really is starting to feel like 1932". The Daily Telegraph (London). Referenced 2010-07-27.
- ↑ Robert J. Samuelson. "The Great Recession's stranglehold", The Washington Post, July 12, 2010. Referenced 2010-07-27.
- ↑ Chris Isidore. "The Great Recession", CNNMoney.com, First Published: March 25, 2009. Referenced 2010-07-27.
- ↑ Doug French. "Productive Debt versus Unproductive Debt", Mises Daily, December 08, 2009. Referenced 2010-07-28.
- ↑ Doug French. "Turning Bread into Stones", Mises Daily, July 26, 2010. Referenced 2010-07-28.
- ↑ The Washington Post. "The lost decade for the economy", a graphic by Neil Irwin, Cristina Rivero and Todd Lindeman. Referenced 2010-07-30.
- ↑ Alan Greenspan. "Global Aging: Opportunity or Threat for the U.S. Economy?" (pdf), Hearing before the Special Committee on Aging, United States Senate, One Hundred Eighth Congress, First Session, Washington, DC, February 27, 2003, p.10. Referenced 2010-07-24.
- ↑ Bezemer, Dirk J. "No One Saw This Coming": Understanding Financial Crisis Through Accounting Models (pdf), Groningen University, 16. June 2009. Referenced 2010-07-30.
- ↑ Fernando Ulrich. "Rise and Fall in Dubai: An Austrian Perspective", Mises Daily, December 16, 2009. Referenced 2010-07-28.
- ↑ 11.0 11.1 11.2 11.3 Leland B. Yeager. "Pandemic: The Contagious Crisis", Mises Daily, July 08, 2010. Referenced 2010-07-28.
- ↑ 12.0 12.1 Philipp Bagus. "The Social Function of Credit-Default Swaps", Mises Daily, June 29, 2010. Referenced 2010-07-28.
- ↑ Xavier Méra. "Second Thoughts on Sovereign Credit-Default Swaps", Mises Economics Blog, July 6, 2010. Referenced 2010-07-28.
- ↑ Secretary Timothy F. Geithner. "Written Testimony" (pdf) for the House Committee on Oversight and Government Reform, January 27, 2010. Referenced 2010-07-28.
- ↑ William C. Dunkelberg, Holly Wade. "NFIB Small Business Economic Trends" (pdf), December 2009. Referenced 2010-08-15.
- ↑ Gary S. Becker, Steven J. Davis and Kevin M. Murphy. "Uncertainty and the Slow Recovery", The Wall Street Journal, January 4, 2010. Referenced 2010-08-15.
- ↑ Tom McGinty and Cari Tuna. "Jittery Companies Stash Cash", The Wall Street Journal, November 3, 2009. Referenced 2010-08-15.
- ↑ Robert Higgs. "More Evidence of Current Regime Uncertainty?", The Beacon, blog of the The Independent Institute, Nov 7, 2009. Referenced 2010-08-15.
- ↑ Keith Bradsher. "China Shuns Investments in West’s Finance Sector", The New York Times, published: December 3, 2008. Referenced 2010-08-15.
- ↑ Robert Higgs. "Regime Uncertainty in 1937 and 2008", The Beacon, blog of the The Independent Institute, Dec 6, 2008. Referenced 2010-08-15.
- ↑ Lori Montgomery. "Business leaders say Obama's economic policies stifle growth", Washington Post, June 23, 2010. Referenced 2010-08-15.
- ↑ Sam Jones. "Why letting Lehman go did crush the financial markets", Financial Times on Mar 12 2009. Referenced 2010-07-30.
- ↑ John H. Cochrane and Luigi Zingales. "Lehman and the Financial Crisis", The Wall Street Journal, September 15, 2009. Referenced 2010-07-30.
- ↑ John B. Taylor. "The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong" (pdf), November 2008, referenced 2010-07-30.
- ↑ Matěj Šuster. "Pád Lehman Brothers a finanční panika" ("Fall of Lehman Brothers and financial panic", in Czech), Liberalni Institut, 2009-09-20. Referenced 2010-07-30.
- ↑ Daniel J. Mitchell. "University of Michigan Study Confirms Link between Financial Bailout and Corruption", Cato Institute, December 22, 2009. Referenced 2010-07-31.
- ↑ 27.0 27.1 Robert Higgs. "Pity the Poor Private-Sector Workers", The Independent Institute, Jan 9, 2010. Referenced 2010-07-31.
- ↑ Robert Higgs. "The Federal Bureaucracy-Plutocracy", The Independent Institute, Dec 12, 2009. Referenced 2010-07-31.
- ↑ Dennis Cauchon. "For feds, more get 6-figure salaries", USA TODAY, 2009-12-10. Referenced 2010-07-31.
- ↑ Robert Higgs. "Government Responds to Economic Woes by Making More Bad Mortgage Loans", The Independent Institute, Nov 22, 2009. Referenced 2010-07-30.
- ↑ AP Real Estate Writer Alex Veiga. "Foreclosure activity up across most US metro areas", Yahoo News / Associated Press, Jul 29, 2010. Referenced 2010-07-31.
- ↑ Robert Higgs. "The Great Divergence: Private Investment and Government Power in the Present Crisis", The Independent Institute, on Sep 18, 2010. Data taken or derived from the National Economic Accounts prepared by the Commerce Department’s Bureau of Economic Analysis (Tables 1.1.5, 1.1.6, and 5.2.6 - see a list of tables for information. Referenced 2010-09-20.