Robert Samuelson: Challenging what we know about the housing bubble

Screen Shot 2015-02-02 at 6.41.15 AMThe Washington Post

(Editor’s note: Opinion pieces are published for discussions purposes only.)

We are constantly learning new stuff about the housing bubble — and some of the new stuff contradicts the old. This is obviously important, because the bubble led to the 2008-2009 financial crisis and Great Recession. What we don’t understand may one day come back to bite us.

There’s a standard and widely shared explanation of what caused the bubble. The villains were greed, dishonesty and (at times) criminality, the story goes. Wall Street, through a maze of mortgage brokers and securitizations, channeled too much money into home buying and building. Credit standards fell. Loan applications often overstated incomes or lacked proper documentation of creditworthiness (so-called no-doc loans).

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