... is that the cornerstone, such as it was, was confidence in the increasing ability of the bottom half of society to pay back unprecedentedly large debts.
Underlying these vast pyramids of debt was, all too often, a promise by a single mother who works at the DMV or a drywaller from Chiapas to (following a brief teaser period) make mortgage payments of, say, $3750 per month for the next several decades.
In recent times, investors have typically gotten rich in our society by betting on the rich to get richer. And most of the time, that's what happens: the rich get richer. Every so often, however, we have a meltdown because, during the bubble, investors temporarily overestimated the rate at which the rich will get richer—e.g., Silicon Valley in 2000, the Texas oil patch in 1982, commercial real estate developers around 1990, and so forth.
But, most of the time, you can get richer betting on the rich to get richer....
The homeownership rate had been stuck at about 64% since the late 1960s. The Clinton and Bush administrations pushed hard to get it up to 68-69%.
What in the world made anybody think that the second quartile up from the bottom was developing more earning capacity?
They'd sent their wives out to work a couple of decades before. What else could they do now to pay bigger mortgage payments in the future?
The second quartile folks weren't getting better educated, weren't getting more unionized, weren't facing less competition from China, weren't facing less competition from immigrants, weren't getting married at higher rates so they could better pool their earning capacity.
So what trend suggested they were now developing more capacity to pay back huge debts than before?
You can read the rest at VDARE.com.
I mean, when was the last time it was smart to bet on the working class getting richer? 1946?