At the height of the US housing boom, Federal Reserve Chairman Ben Bernanke was interviewed on television:
Interviewer: “We have so many economists saying this is a bubble, and it could even cause a recession at some point. What is the worst-case scenario, if we saw prices fall substantially around the country?”
Bernanke: “Well, I guess I don’t buy your premise. It’s a pretty unlikely possibility. We’ve never had a decline in house prices on a nationwide basis. So what I think is more likely is that house prices will slow ... maybe stabilise.”
The US housing bust triggered the deepest financial crisis in living memory. Yet here’s the interesting thing: the beginnings of the US housing bubble can be traced back to 1995, when then President Bill Clinton passed legislation to … tackle housing affordability.
So the lesson here is simple: don’t look to anyone -- except yourself -- to fix your problems.