Should we blame China for US housing bubbles?

I was asked by a friend to give some comments on this paper: "Why are we in a recession? The Financial Crisis is the Symptom not the Disease!" by JKS
 
I know this paper for a while and I am pretty much annoyed by its "blaming China approach". Their story does not hold up on several aspects.
 
First, the US housing prices started to run up substantially in 2000. That is, the last round of housing bubbles started around that time. China’s CA was almost balanced at that moment, though it runs a surplus with the US. China started to run a large overall CA surplus only after 2005. In other words, China is not a net supplier of global credit until that moment. It is not likely that China has a large impact in "creating" the US housing bubbles, though it is likely that China helped to inflate the bubble to a new level after 2005. 
 
Second, the US CA deficits, at least before 2005, were mainly with advanced economies and oil exporting countries. Such CA deficits can be well justified by some standard international macro models. For instance, see Engel and Rogers (2006 JME)
link: http://www.ssc.wisc.edu/~cengel/PublishedPapers/CarnegieRochesterCAcct.pdf
If their explanation is correct, there is no clear linkage between CA deficit and housing bubbles before 2005.
 
Third, China mainly used its reserves to buy treasury bonds, not mortgage backed investment. So the main mechanism in JKS’ paper (in figure 1) is obviously misleading if not totally wrong.
 
The US housing bubble is more likely to be caused by the deregulation of the banking sector in 1990s, which lowers the borrowing costs, and the changes in Fannie Mae and Fredie Mac, which provided implicit government guarantees for mortgage lending to otherwise unqualified borrowers.
 
From Wikipedia:
 
"In 1999, Fannie Mae came under pressure from the Clinton administration to expand mortgage loans to low and moderate income borrowers by increasing the ratios of their loan portfolios in distressed inner city areas designated in the CRA of 1977. Because of the increased ratio requirements, institutions in the primary mortgage market pressed Fannie Mae to ease credit requirements on the mortgages it was willing to purchase, enabling them to make loans to subprime borrowers at interest rates higher than conventional loans. Shareholders also pressured Fannie Mae to maintain its record profits.[ "
 
 
Both of these factors lowered the cost of buying a house and pushed up the US housing prices. At least the timing of these two explanations is much better than the "blaming China approach".
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