Persuasive Essay On The Lemonade Bubble

If you ran a lemonade stand in the desert and one day a bus broke down in front of it, and you were the only place to get a drink for miles, it would quickly be called the Lemonade Bubble. As the amount of lemonade available dwindled for the thirsty customers waiting in line, some people would quickly began offering more money for the same glass. The seller would quickly raise the price and as soon as a replacement bus arrived the bubble would burst. If everyone on the bus only had five dollars in their pockets, then the price of a glass would probably only spike to $5 a glass, but if the bus was full of billionaires then records for the price of a glass of lemonade would probably be set that day.
The 2008 housing bubble was based on this same basic principle, but there are so many complicated moving parts that it is extremely difficult to understand for most Americans. So much of what happened had to do with various government entities trying to regulate, encourage specific actions, and possibly create a fairness in the process that in many ways it distorted the whole concept of supply and demand. Almost as if in the lemonade stand analogy some of the people weren’t even thirsty, but were just trying to buy lemonade in order to …show more content…
This bubble had more to do with human behavior and government intervention than it did with the principles of supply and demand. Freddie Mac, Ginnie Mae, The Federal Reserve, banking regulators, and various other political and government entities all had agendas that served their needs, but may have even been working against each other to try and get the housing market or the economy to do what they felt they needed or wanted it to do. Then you throw in Wall Street, mortgage lenders, and banks both trying to comply with the regulations and trying to profit from the ensuing