The standard story of financial bubbles has that financing gets progressively more tenuous as the bubble expands.
BusinessWeek has a nice piece about the latest and most pernicious financial innovation of the current bubble, the option ARM. It’s too bad that no one in a position of authority was awake before the bubble grew to such proportions.

–Dean Baker

Dean Baker is senior economist at the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, including Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. Read more about Dean.