Propositions on Housing, Instability and Reccessions

Housing bubbles have foreshadowed 11 out of the 14 most recent US recessions. The last Great Recession (1997-2012) began with a housing bubble and collapse, with the effects still lingering today. Bubbles have occurred in economic history but severe episodes are rare. The recent collapse, like the Depression, was unexpected by economic and policy experts.

The Great Recession and the Depression were the result of a severe housing bubble that was triggered by households spiraling into negative net equity. Home values plummeted against fixed mortgages indebtedness, with banks and other lending institutions being pulled into this spiral. Our path to a recovery might be long. Dr. Smith will identify alternative recovery scenarios but none of them are painless.