Increase in Consumer Debt Preceding Crisis Due to Advancement in Technology, Further Evidence Supporting the Idea No Real Estate Bubble Existed Preceding Crisis Presented by Eddison Walters Risk Expectation Theory of the Global Financial Crisis of 2007 and 2008:  The Case for Eddison Walters Modern Economic Analysis Theory

Walters, Eddison T.

doi:10.5539/ibr.v13n9p122

Cited by 3 publications

(8 citation statements)

References 6 publications

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“…Eddison Walters Modern Economic Analysis Theory highlighted the importance of consideration of technological advancement as a significant factor that must be considered when analyzing economic data over an extended period. The theory was developed to avoid errors that distort findings when changes from technological advancement are ignored in economic analysis (Walters, 2020;Walters, 2020C). A critical error leading to the false conclusion of a real estate bubble was data distortion from analysis that failed to consider the impact of technological advancement that transformed the real estate and housing market which shifted the demand curve, creating a completely different real estate market after the transformation.…”

Section: Limitationsmentioning

confidence: 99%

The 3 Decades Global Financial Policy Failure in Housing Market, Runaway Home Prices, Today’s Growing Homeless Crisis: Eddison Walters Real Estate Housing Technology Structural Change Transformational Theory

Walters

2024

EJAAFR

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Failure to address technological-driven structural changes in the real estate market that began three decades ago has caused runaway home prices that developed countries are experiencing today. The real estate crash that preceded the Global Financial Crisis, and the entire Global Financial Crisis resulted from the panic that was created about the rapid increase in home prices that was falsely labeled a real estate bubble by the media which was quickly adapted by policymakers. Policymakers and the media blamed greedy mortgage brokers for the rapid increase in home prices, accusing mortgage brokers of providing mortgages to too many people for homes that the borrowers could not afford. It turns out that the media and policymakers were completely wrong when mortgage brokers were falsely blamed for creating a real estate bubble because a real estate bubble never existed. The true cause of the rapid increase in home prices was the early stages of a real estate boom from technological-driven structural changes in the real estate market. Failure to address structural changes in the real estate housing market which started three decades ago, has resulted in runaway home prices in the United States and developed countries around the world. As a result of the failure widespread economic hardship from homelessness is a significant risk as working families find themselves priced out of the housing market. Three decades of economic policy failures and the mismanagement of the housing sector have resulted in a looming housing crisis that continues to increase as developed countries face runaway home prices. Policymakers throughout developed countries eagerly accepted the media-driven misinformation of a real estate bubble without any evidence presented supporting the narrative. The failure of policymakers to gain an understanding of factors that have been driving the rapid increase in home prices which began three decades ago, resulted in the real estate crash, Global Financial Crisis, and Great Recession. Much of the economic hardship and the looming housing crisis facing working families today could have been avoided. For many working American families, the prospect of home ownership no longer exists due to skyrocketing home prices. The looming homeless crisis facing the developed world today is the direct result of economic policy failures that have ignored the structural changes in the housing market for three decades. The move from print media real estate listings to online real estate listings and the adaptation of online mortgage loan applications along with automated mortgage underwriting between 1995 and 1999, exponentially increased the quantity of inventory needed in the housing market of developed countries. The shift in the demand curve for housing structurally changed the housing market in developed countries resulting in the complete transformation that saw the demand for housing skyrocket by 2000. New homebuyers who previously only had access to local housing markets before the transformation of the housing market began in 1995, had full access to homes listed anywhere online in other real estate markets by the end of 1999. The increased demand caused the rapid growth in home prices. Failure to implement policies to drastically increase home inventory in developed countries to address the structural transformation of the housing market which drastically increased the demand for homes was a significant economic policy failure. Instead of implementing policies to significantly increase home inventory, new construction was idle for over a decade as policymakers adopted the media-driven misinformation of a real estate bubble and supported policies to address the nonexistent real estate bubble.

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Section: Limitationsmentioning

confidence: 99%

The 3 Decades Global Financial Policy Failure in Housing Market, Runaway Home Prices, Today’s Growing Homeless Crisis: Eddison Walters Real Estate Housing Technology Structural Change Transformational Theory

Walters

2024

EJAAFR

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“…Walters 2020A presented Eddison Walters Modern Economic Analysis Theory to address the issue of the changing factor of technological advancement which is often not considered in economic research but is a significant changing factor that can distort economic data analysis over extended periods resulting in research that lack credibility. The theory concluded, it was an error to analyze economic data over extended periods without considering the impact of technological advancement on the data (Walters, 2020A) debt increased because consumers had more access to borrowing as a result of technological advancement (Walters, 2020C). Walters 2020D expanded the research into the growth of real estate prices to fifteen developed countries around the world.…”

Section: Literature Reviewmentioning

confidence: 99%

Walters and Djokic Quantitative Analysis Factor Distortion Theory: Addressing Challenges to Validity and Reliability in Scientific Research, Examples of Junk Science Research on Climates Change, COVID-19, the United States Real Estate Market and Global Financial Crisis of 2007 and 2008

Walters¹,

Djokić²

2022

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The distortion and politicization of quantitative data analysis have resulted in the common acceptance of junk science into the body of literature to promote the political agenda of many. There is a cost associated with data analysis lacking validity and credibility. The politicization of quantitative analysis has resulted in policies being adapted around the world based on COVID-19 research, climate change research, and economic research which amount to junk science. Today, low-income and moderately-income families are facing a looming housing crisis as a result of the misinformation that caused the Global Financial Crisis of 2007 and 2008 and the real estate market crash preceding the crisis. The misinformation threatened the entire financial system of the world, resulting in a debt crisis for a number of countries. Many American families are faced with economic hardship resulting from the increased cost of energy as a result of policies based on climate change research data analysis with no evidence or scientific foundation supporting the theory. COVID-19 policies adopted by the United States government destroyed many small businesses across the country which supported families for generations. Government policies in response to COVID-19 interjected bureaucrats with no medical training between doctors and the treatment provided to their patients. Recent peer-reviewed publication Walters (2020D) introduced Walters and Djokic Quantitative Analysis Factor Distortion Theory to address the problem of unreliable data analysis lacking validity and credibility, resulting in junk science being accepted into the literature as scientific research. Walters and Djokic Quantitative Analysis Factor Distortion Theory is an expansion of Eddison Walters Modern Economic Analysis Theory that was developed to address the changing factor of technology advancement which has been commonly ignored in error by researchers when analyzing economic data over extended periods. Walters and Djokic Quantitative Analysis Factor Distortion Theory raised significant concerns regarding unreliable data analysis due to changing factors assumed to be constant. Changing factors assumed to be constant have resulted in distorted data analysis, lacking credibility and reliability, which has recently become commonly accepted as scientific research in error. The assumption of, “all else being equal”, has been commonly ignored in data analysis of research being accepted into the body of literature. Ignoring changing factors in data analysis to achieve a predetermined outcome is not scientific research and should not be accepted into the body of literature. Walters and Djokic Quantitative Analysis Factor Distortion Theory is a theory that is critical to restoring reliability and credibility to research accepted into the body of literature.

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“…Walters (2020) Eddison Walters Modern Economic Analysis Theory called for the consideration of advancement in technology as a factor when analyzing economic data for an extended period. The goal of the theory is to avoid errors from data distortion due to changes from technology (Walters, 2020;Walters, 2020C).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Data distortion from analysis that failed to consider the impact of technology on data was a critical error leading to the false conclusion of a real estate bubble. The error was determined to be a major factor leading to the Global Financial Crisis of 2007 and 2008 (Walters, 2020;Walters, 2020B;Walters, 2020C).…”

Section: Literature Reviewmentioning

confidence: 99%

“…The firm is the building block of the economy. Understanding the impact of technology that significantly changes the way information is shared is a critical element of analyzing data over extended periods (Walters, 2020;Walters 2020C). Walters (2020C) presented evidence from data analysis, that revealed the growth in consumer debt preceding the Global Financial Crisis of 2007 and 2008 was the result of advancement in technology.…”

Section: Literature Reviewmentioning

confidence: 99%

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Evidence From Data Analysis, Fifteen Developed Countries and the United States Home Prices Increase Between 1990 to 2006 Result of Advancement In Technology, Worldwide Economic Collapse and Great Recession Result of False Information by Media and Economic Policy Failures: Walters Real Estate Bubble Impossibility Price Transparency Theory, Real Estate Bubble Is Impossible, An End to Economic Policies Based on False Information

Walters¹

2020

IBR

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Based on the findings of the current study, policymakers must take a hard look at the media and themselves, because the world can no longer blame the subprime mortgage industry for causing the Global Financial Crisis of 2007 and 2008. The public must demand answers from the media and policymakers explaining how an economic crisis that could have been avoided resulted in the collapse of the global economy. The lack of evidence supporting the theory of a financial bubble and a real estate bubble called for further investigation of factors leading to the Global Financial Crisis of 2007 and 2008. Evidence presented from data analysis in Walters (2018) suggested no financial bubble existed in developed or developing countries around the world, preceding the Global Financial Crisis of 2007 and 2008. Based on data analysis in Walters (2018) the evidence also suggested, the lasting effect of economic policies in response to the Global Financial Crisis of 2007 and 2008 for both developed and developing countries around the world, had no significant impact on the financial sector but pointed to a lack of economic growth. The findings raised significant questions about the existence of a real estate bubble in both developed and developing countries. Evidence from data analysis presented in Walters and Djokic (2019) suggested the existence of a real estate bubble in the United States real estate market preceding the Global Financial Crisis of 2007 and 2008 was a false conclusion. Data analysis in Walters (2019) resulted in, 0.989 Adjusted R-square, 194.041 Mean Dependent Variable, 5.908 Square Error of Regression, 488.726 Sum-of- Square Residual, and 0.00000 Probability (F-statistic), for correlation between the independent variable representing advancement in technology, and the dependent variable representing home purchase price in the United States preceding the Global Financial Crisis of 2007 and 2008. The findings in Walters (2019) concluded the rapid increase in home purchase price in the United States real estate market, was due to increased demand for homes from the adaptation of advancement in technology in the real estate and mortgage industries. The current study expanded the investigation of the growth in home purchase price to fifteen developed countries around the world, building on the findings of previous research by the current researcher. The researcher in the current study concluded, the existence of significant and near-perfect correlation in many cases, between the dependent variable representing growth in home purchase price, and the independent variable representing advancement in technology. The analysis was based on data analyzed from fifteen developed countries around the world, which was collected between 1990 and 2006. The data analysis included home purchase price data from, Canada, United Kingdom, Denmark, Finland, France, Italy, New Zealand, Sweden, Netherlands, Australia, Ireland, Belgium, Norway, Spain, and Portugal. Data preceding the Global Financial Crisis of 2007 and 2008 were analyzed in the current study. The researcher in the current study concluded the existence of overwhelming evidence suggesting advancement in technology was responsible for the rapid increase in home prices in developed countries around the world preceding the Global Financial Crisis of 2007 and 2008. The result of data analysis in the current study provided further confirmation of the accuracy of former Federal Reserve Board Chairmen, Alan Greenspan and Ben Bernanke 2005 assessment which concluded, the occurrence of a real estate bubble developing was impossible due to the Efficient Market Hypothesis, before reversing course subsequent their assertion in 2005 (Belke & Wiedmann, 2005; Starr,2012). The result of the current study provided additional evidence supporting Eddison Walters Risk Expectation Theory of The Global Financial Crisis of 2007 and 2008. The result from data analysis also confirmed the need for the adaptation of Eddison Walters Modern Economic Analysis Theory. As a result of the findings in the current study, the researcher concluded the development of a real estate bubble is impossible where there exists real estate price transparency, as is the case in most developed and developing countries. The researcher presented Walters Real Estate Bubble Impossibility Price Transparency Theory based on the findings. False information of a real estate bubble and predictions of a real estate crash disseminated through the mainstream media and social media can be a destructive force with a disastrous effect on the economy around the world. The failure by the media to hold themselves and policymakers to a higher standard resulted in the Global Financial Crisis of 2007 and 2008. The result of the failure by the media was a worldwide economic crisis and the Great Recession that followed the Global Financial Crisis of 2007 and 2008. Lessons learned from the Global Financial Crisis of 2007 and 2008 can assist in preventing another economic crisis in the future.

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Cited by 3 publications

References 6 publications

The 3 Decades Global Financial Policy Failure in Housing Market, Runaway Home Prices, Today’s Growing Homeless Crisis: Eddison Walters Real Estate Housing Technology Structural Change Transformational Theory

The 3 Decades Global Financial Policy Failure in Housing Market, Runaway Home Prices, Today’s Growing Homeless Crisis: Eddison Walters Real Estate Housing Technology Structural Change Transformational Theory

Walters and Djokic Quantitative Analysis Factor Distortion Theory: Addressing Challenges to Validity and Reliability in Scientific Research, Examples of Junk Science Research on Climates Change, COVID-19, the United States Real Estate Market and Global Financial Crisis of 2007 and 2008

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