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On the Bubble

Gary Becker and Richard Posner look at what created the housing market bubble of the previous decade and why financial institutions couldn’t, or wouldn’t, see it.
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Gary Becker and Richard Posner look at what created the housing market bubble of the previous decade and why financial institutions couldn’t, or wouldn’t, see it. Becker writes, “There were plenty of warnings that there was a housing bubble; why did the industry ignore them? I think it was another though somewhat more complex example of rational herd behavior.”

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