On top of that you have the cost of the stimulus and rescue packages, which will be borne mostly by the people actually paying tax. (I.e. not wealthy investors.)
The recession is distinct from the bubble. Obviously, losing jobs is bad, especially in absence of generous welfare policies. However, the burdens of stimulus and bailout packages are almost certainly going to be carried more by the rich than anyone else. (That's who has the the taxable wealth, after all.)
The recession is distinct from the bubble.
In the same way and to the same extent that the flooding of New Orleans is distinct from the poor design and maintenance of the levees.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
This means that the claim that easy lending has been bad for most people is the one that needs support of data before it should be accepted as true.
the recession may not have been an inevitable outcome of the housing bubble
The better argument for the deterministic case is that the present recession is NOT a business cycle at all, and neither was the Great Depression. (There aren't excess inventories of unsold goods, for example.) Rather, the present is an extraordinary recession caused by collapses in the financial system. Very few recessions are associated with general collapses of the financial sector. There does seem to be good reason to believe that financial system collapses have a high probability of resulting in economic decline. However, there is a lower correlation between asset bubble collapse and financial system collapse. So, without more research it is difficult to make deterministic claims about bubbles and unemployment, which is what I think you're trying to imply.
What is the conventional description of credit in the economy?
That credit has a causal relationship with this, and not just a symptomatic one, seems harder to support, at least with existing research.
Is that because there is no research on the topic, or because the research that there is doesn't support it?
The view I have summarised above is unconventional, but it was expounded by a well-known economist 100 years ago. As I am not too familiar with the academic literature, may I ask you if you know of some contemporary heterodoc economists who might agree with the view I proposed rather than with the conventional one which, if your summary is fair, seems to postulate that credit is incidental to the business cycle and not even part of a feedback loop? En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
The relationship between some poor people gaining wealth due to the housing bubble and others losing it due to losing jobs later is a probabilistic relationship, not a deterministic one, so thinking about the two together would require discounting the cost of job loss due to the bubble by some amount.
