A negative feedback did eventually rein in the housing market: there weren’t any Americans left who could afford homes at their current prices. For that matter, many Americans who had bought homes couldn’t really afford them in the first place, and soon their mortgages were underwater. But this was not until trillions of dollars in bets, highly leveraged and impossible to unwind without substantial damage to the economy, had been made on the premise that all the people buying these assets couldn’t possibly be wrong.
