Hindsight, of course, is always 20/20. In a Sept. 23 appearance on "The Daily Show with Jon Stewart," former President Bill Clinton looked back on the root cause of the housing bubble—the Fed left too much money in the market after the tech bubble.
During the interview with Stewart, Clinton outlined a vision for what might have happened in the country if the money had been invested somewhere else. “This all started because you had too much money, and the only place it could make money was in housing. If you remember, in my second term, we had lots of jobs in part because all these high-tech industries were booming. So, like every boom, it led to a downturn. When the downturn occurred, the Federal Reserve left a lot of money in America, but the only thing that was making money then [in 2001] was housing,” Clinton said.
“In 2001, all this money was out there and it all went into housing and construction. So we had to keep finding funny ways to have more houses, like the subprime mortgages or the derivatives. What if we’d put a lot of this money into solar energy, into wind energy, into hydroelectric vehicles, and making all of our cities as energy-efficient as possible? We would have created millions of jobs, raised incomes, had the revenues to provide health care to everybody, and there would have been competition for investment.”
Clinton argued throughout his term in office, with mixed success, that strong economic growth and environmental protection weren’t mutually exclusive. In recent years, he has devoted increased attention to improving energy efficiency through his Clinton Climate Initiative. He delivered a keynote speech at Greenbuild 2007.