The Housing Bubble and the Financial Crisis

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May 2008, Dean Baker

This essay was published in the most recent Real-World Economics Review, issue no. 46.

Dean Baker first describes the circumstances under which the bubble began to grow. He then discusses how financial innovations and the lack of a proper regulatory structure allowed the bubble to grow to ever more dangerous levels and eventually crash in a way that has placed unprecedented strain on the country's financial system. The third part outlines key principles for reform of the financial system.

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