Bubbles Begetting Bubbles
As is widely understood, the process of cutting interest rates to recover from bursting bubbles creates a sequence of bubbles. Other methods of coping with the consequences of bursting bubbles can also help to generate new bubbles
Here is a suggestion that the Savings and Loan crisis helped set the stage for the recent real estate collapse:
Adams, Johnathan. 1996. “CMBS Structures and Relative Value Analysis.” In Anand K. Bhattacharya and Frank J. Fabozz, eds. Asset-Backed Securities (New York: John Wiley and Sons): pp. 207-26.
208: “The first substantial surge in commercial mortgage securitization may be traced to the Resolution Trust Corporation (RTC) and its decision to use the CMBS [Commercial Mortgage-Backed Securities] market to liquidate the assets of insolvent thrifts. Between 1991 and 1993, the RTC issued an extraordinary $13.8 billion of CMBS.”
Inspired from a hint from