The 'mother of all credit bubbles' is brewing — and this time it isn’t household debt

Let’s recall those heady days of 2006 when home prices were rising 10, 15, even 20 per cent a year, allowing millions of homeowners to refinance mortgages and collectively take out more than US$300 billion in cash from the increased value of their properties. Some spent the money on furniture, appliances, cars and vacations, adding fuel to an already roaring economy. Others reinvested it in the already booming real estate and stock markets. When it finally occurred to everyone that those houses and those stocks weren’t really worth what the debt-fueled market said they were, markets crashed, banks flirted with insolvency, and the economy sank into a deep global recession.

 

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