Let us look again at Figure 2.1, which shows home prices since 1890. What in the world has been happening since the late 1990s to propel home prices up so dramatically?
The figure shows that there were no fundamental changes in construction costs, population, or long-term interest rates at the time of the boom. So what was the cause?
Whatever it was, it was not seen by national leaders, especially not in the United States, where pride in the superiority of our capitalist system sometimes seems to approach religious fervor. During this housing boom, most of our authorities simply denied there was a problem. Alan Greenspan, in his 2007 book The Age of Turbulence, recalled what he used to say about the housing boom: “I would tell audiences that we were facing not a bubble but a