Economics and finance are like going to the dog races, my friend Desmond Lachman of the American Enterprise Institute is fond of saying. Stand in the same place and the dogs will come around again. So they will.
U.S. financial markets produced sequential bubbles first in tech stocks in the 1990s, and then in houses in the 2000s.
What is the collateral for a home mortgage loan? I like to ask audiences of mortgage lenders. Of course, they say, the house, so I am pleased to tell them that is the wrong answer. The correct answer is the price of the house. My next…

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