"Depression" = depression of asset prices. Dot com stocks is the most recent example. When the value of everyone's stocks slide, it's bad for the economy, so even people who don't own stocks get hurt. Same thing happened to stocks in the 20s and tulip bulb prices in Holland. I believe the same thing happened to gold in the 70s.
The only reason these things haven't caused another "great depression" is because economists have learned a lot since the 30s. The government needs to cool things off when they're hot - higher interest rates, lower money supply - and warm them up when they're cold through government intervention in the economy: social security, unemployment insurance, lower rates.
Basically, anytime people are buying things just because the price is going up - in this case mortgages they can't afford, because the house "will be worth more before the rates adjusts" - inevitably creates a situation where everyone sells as soon as the price drops and prices plummet.
Real estate developers were placing strict limits to keep speculators out of their development. When real estate developers show more awareness of basic economics than the administration, there's only one place to put the blame.
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