From my new VDARE.com column:
Traditionally, markets work by balancing greed and fear. Why was greed allowed to outrun fear so badly this time?
One clue comes from looking at the places with the sharpest decline in home prices, such as California, South Florida, Arizona, and Nevada. For example, the median price of homes sold in California last month was $328,000, down 31.5 percent from a ridiculous $484,000 in June 2007. Almost 42 percent of all homes sold in California were in foreclosure.
Why did the housing bubble get out of control in many heavily Hispanic regions?
Because many important people wanted it to.
A widely overlooked reason behind this economic disaster is that the politicians, real estate interests, and financiers told the public that they weren't speculating wildly on the insane hope of home prices rising forever. No, they were actually helping minorities share in the American Dream!
A percipient April 13, 2007 article in the nonprofit San Diego Voice by Kelly Bennett, Foreclosure Wave Said to Hit Latinos Hard, reported:
"This decade, a national push to increase homeownership among Latinos coincided with one of the longest, most dramatic periods of appreciation for home values. Latino mortgage and real estate professionals put forth aggressive outreach campaigns in the community, while lenders reached out to huge, untapped sections of the market by loosening qualifying standards. …
"Because a widened lending gate allowed many more Latinos and other minorities into the housing market than had entered previously, lawmakers and special interest groups championed the lenders' efforts to extend homeownership to those groups." …
Diversity served as the perfect politically correct excuse for rampant irresponsibility. It gave insiders a rationale for putting their thumb on the scales of the vast lending market in the sacred name of anti-discrimination. Who dared be so racist as to argue that blacks and Hispanics should get fewer loans per capita because they were less likely to pay them back? That's "the soft bigotry of low expectations." …
Today's San Diego Union Tribune article sums up what will be the verdict of history on America in this decade:
"Typically, a severe housing slump is preceded by a recession and job losses, but that is not the case this time around, [John Karevoll of DataQuick] said. 'So now all us number crunchers are scratching our heads. This wasn't caused by a recession, but by stupidity.'"
But it's not just the fault of stupid borrowers, although a national policy of importing more of them by not enforcing the immigration laws clearly worsened the problem.
Stupidity extended all the way up the hierarchy—and that was intentional.
Political correctness makes people stupid, so diversity provided the ideal cover story for financial crime of the century.