Housing, Global Finance, and American Hegemony: Building Conservative Politics One Brick at a Time

Abstract

What role did capital flows into and out of the U.S. play in both the global housing boom and bust and the new politics this bubble produced? This chapter provides an international context both for U.S. domestic housing developments and the more domestically oriented analyses in the other chapters. The international context matters for three reasons. First, the U.S. housing finance system was one of a few crucial conduits for the international capital flows that drove down the nominal cost of borrowing globally over the past 20 years. Second, because housing finance systems differ across countries, declining nominal interest rates differentially stimulated growth across the developed countries. Third, the politics of housing is closely connected to the politics of U.S. “hegemony” by creating a more market-friendly domestic politics globally. These are different but overlapping phenomena.