I have a friend who regularly reminds me that if you jump off the top of an 80-story building, for 79 stories you can actually think you're flying. It's the sudden stop at the end that always gets you.

When I think of the financial-services boom, bubble and bust that America has just gone through, I often think about that image. We thought we were flying. Well, we just met the sudden stop at the end. The laws of gravity, it turns out, still apply. You cannot tell tens of thousands of people that they can have the American dream - a home, for no money down and nothing to pay for two years - without that eventually catching up to you. The Puritan ethic of hard work and saving still matters. I just hate the idea that such an ethic is more alive today in China than in America.

Our financial bubble, like all bubbles, has many complex strands feeding into it - called derivatives and credit-default swaps - but at heart, it is really very simple. We got away from the basics - from the fundamentals of prudent lending and borrowing, where the lender and borrower maintain some kind of personal responsibility for, and personal interest in, whether the person receiving the money can actually pay it back. Instead, we fell into what some people call Y.B.G. and I.B.G. lending: "you'll be gone and I'll be gone" before the bill comes due.  [emphasis added]

It took only six weeks of negotiations for General Growth Properties, the nation's second-largest shopping mall owner and operator, to agree to buy the Rouse Company in 2004 for $12.6 billion, a breathtaking price at the time.

Now that hasty decision, which drew immediate fire from Wall Street analysts, has come back to haunt General Growth and may lead to the sale of the 54-year-old company, whose widely known properties include Ala Moana Center in Honolulu, Water Tower Place in Chicago and the Grand Canal Shoppes at the Venetian in Las Vegas.

General Growth's acquisition of Rouse, which was known for its innovative planned communities like Columbia, Md., and its "festival marketplaces" like Faneuil Hall in Boston and the South Street Seaport in Manhattan, was financed almost entirely with short-term mortgage debt. This financing strategy, with debt equal to more than 70 percent of its capitalization, raised fears that General Growth, a real estate investment trust based in Chicago with more than 200 shopping centers, had become overleveraged - fears that have now been borne out. The deal included $5.4 billion of Rouse's debt. [emphasis added]