David Fleer
Bristlecone Value Partners, LLC
12301 Wilshire Blvd., Suite 320
Los Angeles, CA 90025 USA
Work 1-877-806-4141

Five Years Later: Lessons Learned?

September 19th, 2013

This month saw the five-year anniversary of Lehman Brothers’ bankruptcy, a defining moment during the recent financial crisis.  Drawing the right policy lessons might be beyond the scope of this investment commentary, but at the same time, it remains important to understand the role our government can play in solving or creating economic problems.

One of the most widely repeated and mis-attributed quotes is: “The definition of insanity is doing the same thing over and over and expecting different results.” Yet, it is hard not to think that our government’s mental health is failing when reading about the increasing burden that student debt is exacting on young people today.

Most experts agree that subsidizing housing loans was a major cause of the recent bubble.  This shouldn’t be surprising: economists have repeatedly demonstrated that when too much money chases too few goods, the price of said goods inevitably rises. It is also well documented that economic crises triggered by excessive credit lead to deep downturns and slow recoveries in business cycles. Nonetheless, with the aim of widening “home affordability”, successive governments supported pumping ever growing amounts of credit into the housing market. Read the rest of this entry »

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