It is now April 2010 and in China the common wisdom is that house prices will continue to rise and that it couldn’t possibly be a bubble because all the major players are still involved.

The fact is that when house prices were going up, social scientists were continually doing audit studies and experiments to argue for MORE lending to people with poor credit histories, especially minorities, thought to be responsible for over half the defaulted subprime dollars.

Now you’re seeing revisionist history, and many of the same sociologists and psychologists pretending they were really concerned about banks pressuring borrowers to take on bad loans. In reality these situationist experts were likely to be testifying in anti-redlining lawsuits that banks were irrationally ignoring potential borrowers because of hidden biases.

At least Alan Greenspan has enough honor to admit he made a mistake.