In all the rush to crucify the "greedy" Wall Street bankers and lax regulators for the current financial crisis the actual offender is going unnoticed.
It doesn't take a Nobel Prize winner to identify the underlying cause of the credit crunch as stemming from over-investments, which has left a glut of unproductive assets (e.g. real-estate around the world, factories in China, etc) that are dragging down the global economies. This mal-investment binge is so obvious that some pundits have even suggested a whole-scale demolishion of homes as a strategy for fixing the economy.
But what caused this horrendous buying (and construction) binge to begin with? Fortunately, we don't have to go far to find the underlying disease.
It is no cooincidence that real-estate prices have been appreciating at an historically abnormal rate after the Great Depression and World War II. The big changes that made this resurgence of real-estate possible are obvious: mortgage tax deductions and government subsidized mortgages (i.e. Fannie Mae, Freddie Mac, FHA, etc). Prior to the 1930s these government programs to foster home-ownership didn't exist.
It is these
