One of my favorite bloggers ventures
into political-economy territory: was the subprime-mortgage bubble responsible
for the re-election of George W Bush in 2004?
I wonder if the mortgage and credit debacle is a clue. Could it reveal one
of the reasons poor or working people voted for Bush last time around? I wonder,
because for working folks voting Republican is usually and traditionally a
vote for Big Business, and therefore against the working man’s self
interest.
<Lucid 770-word explanation of the subprime bubble and bust>
Meanwhile the recipients — the workingmen and women who are barely eking
by — suddenly have loan offers thrown at them by the truckload. They
feel richer, more flush; things are going well it seems, and their situations
improving. It’s not so hard to pay the bills. They worry less and sleep
more. A sense of blissfully ignorant well-being pervades the land. The working
class and the under- and unemployed assume that the Republicans are somewhat
responsible for this new (virtual) wealth — and maybe they were. It
would follow that Mr. Joe Average might vote for the administration seemingly
responsible for his new sense of well-being.
I’d need to go back and look to see how big the subprime mortgage industry
was in November 2004; my feeling is that the era of crazy excess liquidity was
yet to come. The housing bubble predates the subprime-mortgage bubble: in fact,
you need a few years of housing bubble to get the low subprime default rates
necessary to inflate the subprime-mortgage bubble.
But the housing bubble was certainly well established by November 2004, a large
majority of Americans own their own houses, and any home-owning American’s net
worth probably grew substantially during the first George W Bush administration.
Which is not to say that incumbents always win elections if there’s a housing
bubble: look at what just happened in Australia, or at what happened in Spain
in 2004. But at the margin, it makes intuitive sense that a suddenly-wealthier
population might be more inclined to vote for the status quo.