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False Profits by Dean Baker

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FOUR

Will They Ever Discover the Housing Bubble?

The country's top economic policymakers and leading economists somehow managed to ignore the housing bubble as it expanded to more than $8 trillion. Remarkably, even as its collapse has led to the worst downturn since the Great Depression, many people still don't understand the housing bubble and its impact on both the housing market and the economy.

Over the last two years, frequent calls have been made in policy circles suggesting that stabilizing house prices would be both possible and desirable in the current housing market. Rather than recognize the bubble and adjust housing policy accordingly, ...

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