But these risks — and the chain reactions throughout the whole financial system — were like the traffic ignored by a small child dashing out into the street in pursuit of a bouncing ball.
The whole economy got hit when the housing boom became a housing bust, and we are still trying to recover, years later.
What makes all this painfully ironic is that the latest data show that the rate of home ownership today is lower than it has been in 18 years. There was a rise of a few percentage points during the housing boom, but that was completely erased during the housing bust.
Housing has been just one area where the bouncing ball approach to political decision-making has led the country into one disaster after another.
Pursuit of the bright red bouncing ball of "universal health care" has already begun to produce collisions with reality in the form of rising insurance premiums to cover the cost of generous government-mandated benefits — to be paid for by someone else.
Here again, there have been many warnings, but the political response to those warnings was to rush ObamaCare to a vote before even the congressmen who voted for it had a chance to read it.
Now, one of the Democratic senators who voted for it — Sen. Max Baucus — has called it "a train wreck." And ObamaCare, with its thousands of regulations, has not even fully taken effect yet.
The same mindset has prevailed internationally. Trying to make Middle East countries more "democratic" is the bipartisan bouncing ball of American foreign policy.
Some of these countries existed thousands of years before there was a United States — and, in all that time, they never came close to being democratic.
Maybe democracy has prerequisites that do not exist in all places at all times. And maybe pursuing it in utter disregard of the repercussions — which we have already begun to see in Libya and Egypt — is one of the most dangerous pursuits of a bouncing ball.
Sowell is a senior fellow at the Hoover Institution at Stanford University in California. His website is www.tsowell.com.