Steven Gjerstad and Vernon Smith on the housing bubble.

How can one crash that wipes out $10 trillion in assets cause no damage to the financial system and another that causes $3 trillion in losses devastate the financial system?

The first crash was the Dotcom bubble.

The hypothesis we propose is that a financial crisis that originates in consumer debt, especially consumer debt concentrated at the low end of the wealth and income distribution, can be transmitted quickly and forcefully into the financial system. It appears that we’re witnessing the second great consumer debt crash, the end of a massive consumption binge.

They propose that the Depression was triggered by a mortgage meltdown, rather than by the stock market crash or a monetary contraction.