What Do Bubbles Do? Perception dictates the majority of human activity. A man at a bar perceives a woman to be attractive, based on his own distinction and the (potentially twisted) social distinction of beauty, and thus decides to go talk to her. We perceive something to be too difficult, and thus give up or refuse to attempt it in the first place. We perceive that a college education is worth over $100,000 dollars, typically extending our debt several years into the future, and thus it becomes worth over $100,000. And we perceive a house to be worth a variable rate home loan of $200,000+, and thus its perceived value hits that mark, and climbs, and then devastates the country with the worst economic crisis since the Great Depression. In an ocean, there are predators, and there is prey. The deep sea angler fish uses a bioluminescent appendage on the front of its body in order to attract the likes of smaller, less aware (naïve) ocean creatures. The smaller creature, oblivious to the volatility of a “free lunch,” approaches the shimmering object. Delighted at the prospect of a meal for which so little effort was required, the soon-to-be victim closes the final gap between itself and the fruits of its everlasting search for sustenance. The creature’s elation is short lived, as the jaws of cause and effect emerge from behind the shroud of darkness, lightning quick, malicious, indiscriminant; and, most deplorably of all, untouchable.
Irresponsibility, naivety, lack of education, obliviousness, and a lack of realism follow our little fish like loyal dogs. He meets the angler fish in the angler’s office, where so many have come before the little fish to nibble at the light of home ownership. The angler brings along his dogs as well: greed, influence, indifference, and of course, his 200 pound dober-shepard, Federal Fiscal Policy. All is well and good for years. From 1994 to 2004 the percentage of home ownership in the United States rises from 64% to 69%, an all-time high. Home ownership rates do not necessarily correlate to a negatively or positively inclined economy, but that is where trouble begins as a result of unnatural tampering. Since 1965 the ownership rate had hovered at around 65%. In 2004, in his campaign for a second term, President Bush preached his belief in the value of home ownership both for individual citizens and the economy as a whole. He wanted loans to be more easily acquired by the people for whom he wished to create an “ownership society.”
"This Administration will constantly strive to promote an ownership society in America. We want more people owning their own home. It is in our national interest that more people own their own home. After all, if you own your own home, you have a vital stake in the future of our country."
- President George W. Bush, December 16, 2003
This proposal, over the course of his term, consisted of the American Dream Downpayment Act, the Zero-Downpayment Initiative, Single Family Affordable Housing Tax Credit, funding for the Self-Help Homeownership Opportunity Program, and almost $3 billion in home loan guarantees for low-income borrowers. The opinion of many is that the ugly head of reality began its slow rear as the President urged the private sector, big banks and investors, to assist in the effort to increase homeownership, especially for minorities. After the dot.com crash of the early 2000's, interest rates were at a record low of 1% per the FED, which down the lineexacerbated the ease of loan procurement, because borrwing was cheap. The potential for profit in the housing market was far too appealing, especially with the ruler of the “free world” plugging home ownership all along his campaign trail. The home ownership rate reaches its all-time high, and it is unclear whether ownership achieves that level as a result of easy credit, or whether easy credit emerges as a result of higher home ownership. When people who cannot pay for a home loan own a home, or two,