The housing bubble

From The Economist - which, like a broken clock, is right at least twice a day:

If you ask me, the ultimate culprit in the financial crisis was the American cult of home-ownership. There are many ways to help poorer Americans accumulate wealth, such as channeling payroll taxes into personal retirement accounts. But we don't do that. Instead, because we consider it a humiliating indignity not to have a room or ten of our own, we subsidise home-buying six ways to Sunday and tell banks they won't have to suffer the downside of loans offered to bad credit risks. I think it's safe to say that this hasn't turned out to be the best scheme for helping poorer Americans into the ownership class.

This chart from Daniel Indiviglio's Home Prices May Drop Another 25% says it all:

Several weeks ago, Barry Ritholtz posted the following chart. It was originally featured by the New York Times, and updated by a commenter to Ritholtz's blog named Steve Barry.