In library of Congress, online portal you can access historical news paper, in those papers you can access stock prices, as all the news paper in business column there a section which include last day closing price of stock market. Yes, there are a lot of other issues, but the root cause of the crisis is that Americans thought that housing prices would keep going up. For individual Americans it meant they thought they could keep refinancing their homes, making adjustable interest rates irrelevant. For individual Americans with adjustable mortgages it meant they could continually refinance their loan terms as long as housing prices kept going up, keeping their rates low. It also meant that debt was generally cheap: you had low interest rates on credit cards, mortgages, student loans, etc compared to historical averages.
Bankers got into the same state of mind as American homeowners: they assumed that housing prices couldn’t fall as much as they did. This is fine as long as things keep going well and prices keep going up: banks kept lending to each other (and homeowners) under the assumption that things would eventually be paid off. Why worry about how much you owe on your mortgage when prices keep going up…you can always sell if the payments get too high and make a killing over what you paid for it.
Housing prices falling, stock market fluttering like a heart in fibrilation, people panicking, government stymied, panic looming right around the corner, helplessness of the common person. Housing prices drop and the questionable mortgages begin to default everyone except the golden parachute FM1 and FM2 people are left holding the bag. My point there wasn’t that high interest savings accounts can be substituted for investing in the stock market (they can’t), as equity should produce much greater yields over time. Instead I was suggesting that there are lots of small ways that people can increase their income so they WON’T have to pull money out of the stock market.
Unfortunately success depended on ever increasing prices and continued low interest rates and the bulk of these people weren’t sophisticated enough to be able to adequately assess the risks. In the United States, companies have been allowed to buy back stock for most of their existence, but the pace of buybacks did not really start picking up until the early 1980s, which some attribute to a SEC rule ( 10b-18 ) passed in 1982, providing safe harbor (protection from certain lawsuits) for companies doing repurchases.
The legal rules governing buybacks in the US today are captured nicely in this Harvard Law School summary In the graph below, I show aggregate stock buybacks and dividends at US companies going back to 1980. This is a reasonable point, and I have brought in the stock issuances each year, to compute a net cash return each year (dividends + buybacks – stock issues) to contrast with the gross cash return (dividends + buybacks).