ECON 2020 Lecture Notes - Lecture 24: Root Mean Square, Washington Mutual
Document Summary
Trust in the markets: clinton, bush, congress, federal reserve, banks. Washington mutual, countrywide (max pro t, max risk) not around anymore. Housing bubble: in the last century the average increase in housing values across the country <1% (real) annually, case - shiller housing price index. Jan 1990 - 1999 average annual increase 2. 47% Jan 2000 - 2006 average annual increase 11. 93% Jan 2006 index = 203. 75 (housing prices basically doubled) Jan 2012 index = 136. 59: median household income. 2000 to 2014 - as income decreased, so should spending power: real gdp. 2009 -3. 07: during the mid 2000, despite decreased incomes, there was an increase in. Reasons: decreased savings & increased borrowing, tap into home appreciation eg. re nance mortgage, 2000 house worth k, 2004 house worth k for re nance. Pay off original loan and take out new loan on current value.
