He saw this mess coming a mile away. His book, Bad Money, is a great read. From his book:
"...between 2001 and 2006, an unprecedented number of Americans used their homes as ATMs, turning huge chunks of residential equity into borrowed, but spendable, cash."
"...over the past five years, the value of U.S. home mortgage debt has increased by nearly $3-trillion. In 2004 alone, it increased by almost $1-trillion. Net mortgage borrowing that year not used for the purchase of new homes amounted to nearly $600-billion, or almost 7% of disposable personal income...indeed, over five years, the housing sector seems to have provided some 40% of the growth in U.S. GDP, and employment, representing stimulus on a grand, almost 1930s scale."
In 1950 the manufacturing sector represented 29.3% of U.S. GDP, while Financial Services represented 10.9%. In 2005 Manufacturing represented 12% and Financial Services 20.4% of U.S. GDP. Imagine how things would be if the government didn't step in to help in the recent bail-outs; 20% of GDP!!
"Shrewd cabinet members and elected officials also preferred a less revealing GDP figure. New York City mayor Michael Bloomberg and Senator Charles Schumer, in releasing an in-depth portrait of New York finance in 2007, described the national financial services sector as just 8 percent of GDP by using an outdated definition that excluded mortgage lending and real estate operations." (emphasis added)
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