I think government policies were a top cause of the real estate boom, bust and the family tragedies that followed.

[T]he political response to rising inequality””whether carefully planned or the path of least resistance””was to expand lending to households, especially low-income households. The benefits””growing consumption and more jobs””were immediate, whereas paying the inevitable bill could be postponed into the future. Cynical as it might seem, easy credit has been used throughout history as a palliative by governments that are unable to address the deeper anxieties of the middle class directly.

Politicians, however, prefer to couch the objective in more uplifting and persuasive terms than that of crassly increasing consumption. In the US, the expansion of home ownership””a key element of the American dream””to low- and middle-income households was the defensible linchpin for the broader aims of expanding credit and consumption.

“… this is a story about how policies intended to reduce inequality had the unintended consequence of precipitating America’s worst economic slump since the Depression.”

Via The Economist.