When Lehman Brothers declared bankruptcy in September 2008, policymakers worried about the potential collapse of the entire financial system and a second Great Depression. The worst was averted. After extensive bailouts, the financial system remained largely intact.

As the smoke cleared, a new consensus emerged: never again. Regulators noted the role played in the crisis by exotic investment vehicles like the mortgage-backed security and opaque derivatives like the credit default swap. Economists decried an economic system that relied for growth on the expansion of debt to facilitate speculative housing construction.

Yet looking back from the vantage point of 2023, it appears that we have learned nothing.

Housing valuations around the world are once again close to their previous peak. In the United States, inflation-adjusted house prices are only 1 percent lower than they were at the start of 2007, while in Britain they are 4 percent higher. Mortgage-backed securities have made a comeback too. Commercial banks now hold some $2.7 trillion in these instruments, or three times the $990 billion they held in 2009.

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