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Originally Posted by KC911
A lot of these discussions feel like 2007...it's all good  ... |
I was trying to figure out what you meant, so I did a little research.
This 2012 article is a fascinating introspective of what happened world wide in 2008.
January 17, 2012
How China’s Boom Caused the Financial Crisis
https://foreignpolicy.com/2012/01/17/how-chinas-boom-caused-the-financial-crisis/
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But it was China, not the U.S. economy, that prospered on Americans’ spending binge (via refinancing mortgages).
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Low interest rates................the source of the problem?
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The large buildup of savings in China and other emerging economies (mostly oil exporters) depressed interest rates worldwide from 2004 on, as too much money was chasing U.S. Treasury bonds and other supposedly risk-free securities, driving up the price of bonds and driving down interest rates...................
While the subprime mortgages with exotic features did not help, it was these low long-term interest rates that were the most important factor in enlarging the housing bubble.
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The following is a rationalization for decimating Americas middle class and reducing it to a smoldering stub.
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And without China’s rise, inflation in the early 2000s would have been higher, propelling the Fed and the ECB into action. But more importantly, China and other emerging economies’ savings would not have depressed long-term interest rates worldwide.
But all is not lost. One consolation is that the past decade of loose living in the United States and Europe has done much to lift hundreds of millions of people in China and India out of poverty. No development aid program can stake a similar claim.
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We lifted China and India out of poverty, and all it cost us was our middle class and manufacturing. What a great social program our leaders came up with, hey?