Through private residential investment and consumption spending on housing services. Residential investment includes construction of new single family and multifamily structures, residential remodeling, production of manufactured homes, and brokers’ fees.

Consumption spending on housing services includes the amount of rent paid by tenants, the imputed value of housing services to home owners, and the amount paid to hotels by households for housing services.

Combined, in 2007 it was about 15%.

http://online.wsj.com/article/SB119906606162358773.html

It’s now about $14T. Of that, housing is about $1.7T and finance/insurance is about $1.1T.
http://www.nemw.org/gdp1.htm

What if it were to turn out that our housing is not nearly as valuable as estimated, and our finance/insurance instruments are not worth very much? All those weird derivative things that nobody understands, and their value is what somebody will pay for them….

It might turn out that GDP hasn’t actually increased at all. It might have gone down, if you readjust the values to what they’re worth today.

If GDP hadn’t increased then all the calculations we make against GDP would be off. Like, people say that our military spending isn’t really important, it’s only 4% of GDP. We used to spend a lot more than that, why during WWII it was a whopping part of GDP. If we could afford 6% of GDP all through the war surely we can afford 4% now. But if GDP is only 80% of what we thought, then it’s 5% of GDP, not 4%.

Similarly people argue that the national debt is really not out of line, it’s only $10T while GDP is $13T. But that doesn’t look as good if GDP is actually only $10T.

And they argue that US external debt of $13T isn’t so bad when US GDP is also $13T. Etc.

If you want to estimate the part of GDP from automobiles, the methods are reasonably clear. You can count the cars produced, and what they sold for. You can count the auto workers paid etc. Hard to get it far wrong without some fraud.

But if you want to estimate the value of the stock of housing, it’s murkier. It’s worth what somebody would pay for it if it was for sale. And the value of a house’s mortgage depends on the chance of default. And the value of derivative instruments that insure against the chance of default depends heavily on the rate of default. Etc.

The atmosphere of deregulation is responsible? With no proposed mechanism or details or proposed regulations that were—fatally—rejected. C’mon, that’s B.S.

If you’re going to estimate the value, shouldn’t it be by some standard way? That’s what government regulation was supposed to do. But it didn’t. New kinds of fraud that didn’t get stopped.

It seems plausible to me that the policy of not regulating bad practice had a lot to do with the tremendous increase in claimed value for things that at the moment have no buyers. I personally am not ready to prove it, but it doesn’t sound like BS to me.

No—this is ridiculously weak. The atmosphere of deregulation is responsible? With no proposed mechanism or details or proposed regulations that were—fatally—rejected. C’mon, that’s B.S. It may turn out to be effective politics this season, but intellectually, that’s pure snake oil.

One reason not to think that the unique ‘deregulation mania’ in the U.S. was the underlying cause (even in some undefined, atmospheric sense) is that EU markets seem to be in the early stages of coming unglued due to housing bubbles bursting over there. Can you tell me where are the finger prints of Republican laissez faire-ism in those markets?

The evidence is weak. There is plenty of ‘blame’ that can be levied. Of course in ‘96 when the big swing in CDS’s began we were enjoying the new under sheriff’s ‘revolution’. The Sheriff was having a growing and difficult time using his badge’s authority. In Y2k we got a new Sheriff supported by the under sheriff and deputies who were vocally well homogenized in the ‘less is more’ approach to regulation. None of this is to say that if Clinto did not have the issues of many forbidding -gates he’d of done any more than he did. Removing the feline scent from a maze will alter the results of the mice placed within.

Now mark-to-market is exactly the type of ‘transparency’ regulation that even most conservatives or libertarians would support. I certainly would have supported it if asked a year ago. So this isn’t really a neat ideological point. Just saying that unforseen consequences can be a bitch.

Did Cheney’s redundant repetition of “WMD” make them appear in Iraq?
Repetition works and not always in a good manner. It would be one thing if whoever had made use of substance and or even coherence. Calling in Hazmat for a dirty diaper pail, while tempting at times, may reflect more on the caller than the soiler of cloth.