It’s simple, really. It’s a new generation of sharpies and wheeler- dealers and people who think they can make a killing in real estate. It usually is precipitated by some imprudent bad guess at the Fed and spreads to the economy in general.

Most susceptible seems to be real estate. We had such a crisis in 1988 and we have one working now. The operators who were active in the market in the ’80s are now dead or retired for the most part. The current crop is too young to remember what happened in 1988. So we have similar events happening again.

Oh yes, they could read about the crash of ’88. They could ask an elder about it. But that would be admitting that somebody knows more about something than they do. So off they march into the maw of repeated history.

Investors can be forgiven for being murky on the causes and effects of the Peloponnesian War and circumstances of that period. But 20 years is not that much of a human lifetime any more. The events surrounding the last crash should be studied by anyone serious enough to commit major money to a project. In fact, there is remarkable similarity between the two.

In a nutshell, the crises stem from easy money encouraging people to borrow and buy. Lenders were happy to rely on the self-claimed expertise of their borrowers, who often had little or no money of their own in the deal. Money was loose, prices were escalating at a dizzying rate, and more people wanted to get in on the bonanza. Even people with hourly jobs were conned into flipping houses.

Of course, when the music stops, it stops most abruptly. There just aren’t enough chairs to go around. When the house, office building, shopping center or apartment complex suddenly stops appreciating and buyers suddenly become scarce, the investor has to keep paying on his loans with income that may be faltering.

In less time than you can imagine, the heavily mortgaged property is worth less than is owed on it and the property is said to be upside down. It is difficult to sustain such properties, so they go into foreclosure. Losses are taken by the lenders who must foreclose, even though they are not in the business of owning real estate and are not good at rehabilitating it. In their hands, it becomes worth even less.

Stones must be thrown. Blame must be assigned. Someone has to go to prison. The public is clamoring for a scapegoat.

But lo and hark! Over the hill, to the sound of trumpets and drums, comes CONGRESSMAN. Wearing his trademark pink tights and purple cape, he leads a phalanx of men and women with the power to write checks on the U.S. Treasury, whether it has any assets or not. Why, it’s Barney Frank crying out to rescue all the people who have bet wrong on the market and are in jeopardy of taking a loss.

Not as long as CONGRESSMAN is around. He will bail them out.

Buy more house than you could afford? Fear not. CONGRESSMAN will not let you fail, will not allow you to be foreclosed. For a small fee, CONGRESSMAN will solve your problems by distributing them among all the other taxpayers. It’s only $300 billion worth of questionable mortgages. They’ll never notice.

And, CONGRESSMAN gets to be a hero again, exacting as a price for his good deeds that funding also go to his favorite advocacy groups.

Wherever you find a financial crisis, you can start looking for culprits under the neoclassical rotunda of the Capitol. If you are disappointed at the failed policies of the past, wait ‘till you see the failed policies of the future.

E-mail comments for publication to editor@azbiz.com. Contact Lionel Waxman at territorial@waxmanmedia.com. Waxman’s Flashpoint commentaries are published in The Daily Territorial.