<p>If you notice there wasn't any "housing boom" in the 90s even due to the stock market. Attributing the stock market performance to the deficit cut is not correct. The primary reason why the deficit cutting spree began (and why the stock market also began appreciating) is because of spending and tax reforms. Clinton cut the budget and increased taxes which lead to the start of reducing the deficit. The stock market just didn't appreciate due to no reason. It had to do with the economic conditions fostered by the Clinton era administration. For example, inflation had dropped to its lowest levels. The general cutting of deficit increased the value of the US Dollar which made imports attractive. The stock market doesn't move without any underlying economic stimulus. The Clinton administration was able to create a good economic condition for the stock market appreciation to actually occur. </p>
<p>Yes the initial interest rate cuts did have to do with the stock market crash. However, I will argue that the federal deficit has a lot to do with the federal spending than by the private sector. For example, view the following federal spending on defense chart: <a href="http://www.d-n-i.net/charts_data/evolution_of_the_fy_2004_supplemental.htm%5B/url%5D">http://www.d-n-i.net/charts_data/evolution_of_the_fy_2004_supplemental.htm</a>.
When the governmet does little to control the deficit, it is useless to blame simply the housing sector for the entire blame for the matter. For example, in 2004 the administration conducted a tax cut even though the deficit sat at 477 billion. As I have noted, if the government doesn't create the economic condition then markets will simply not follow. As the government itself became a huge user of debt, the private sectors (particularly housing as you had pointed out) followed suit as well. </p>
<p>[I do have to conduct errands while writing these ;)]</p>