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In response to
"Bad analogy on your part."
by
the lioulu with crappy mag
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it's a perfectly applicable analogy.
Posted by
Reagen (aka Reagen)
Nov 23 '09, 18:40
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by conditions being the same, I'm talking about interest rates, which were largely comparable between the two countries.
We do have different laws, which is precisely why having low interest rates didn't lead to a housing crash up here (the market slowed substantially and went down in places because of overall economic conditions, but it wasn't due to anything fundamental in the market) but that's precisely the point -- it was the shenanigans and not the interest rates that caused it. If interest rates went up you could still have the same derivative trading that went on - it's not a condition that requires low interest rates.
Here's the test - in my analogy, you could say that less people would drive if gas prices were higher, and therefore you'd have less accidents. But the rational response is not to advocate for higher gas prices - it's to advocate for people to drive more safely. Likewise with housing - if there's a problem with people buying out of their means, and gaming the markets, the response is not to raise interest rates, but to tighten up the regulations.
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