A broad-based bubble

09/01/10 20:30 Filed in: Real Estate | US
Below is “a comparison of commercial real estate prices from Moody’s/MIT with housing prices from Standard and Poor’s/Case-Shiller.” Paul Krugman shared the info in his blog on the NY Times site on 07 Jan 2010. Here is the link but most of the key points are covered here.

cre

Krugman then summarizes with the following statement: “From my perspective, the CRE bubble is highly significant; it gives the lie both to those who blame Fannie/Freddie/Community Reinvestment for the housing bubble, and those who blame predatory lending. This was a broad-based bubble.”
CRE = Commercial Real Estate

Krugman announced that he will be focusing a bit on banking regulation in some upcoming NY Times columns. The guy is smart while having a populist bias so it will be interesting to read what he has to say. Many want to blame the banks and think the credit crunch is because of the ‘sub-prime problem’ in the residential housing sector. They believe that new rules and a tax on bonuses paid to bankers will solve the problem. In what I will call an introduction Krugman claims that bubbles cannot be prevented so banking regulation need to be designed to address the right problems. Here is a link to my prior blog entry on the topic.
-John Corey

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