On November 9, 2008, China initiated a $586 billion stimulus package aimed at soothing a national economy that was beginning to breed discontent. The program involved lowering credit restrictions, expanding social welfare programs, and a complement of infrastructure improvement incentives. Unfortunately, the program has worked quite well.

The Chinese stimulus plan created such a free flow of funds, people started buying second and third homes. The real estate market there began running full tilt. Construction entered a boom phase, aided by Olympic excitement. Real estate values went through the roof.

The former head of the world's most powerful central bank once again provided tutelage to Washington-based investigators regarding the source(s) of the financial crisis.

Former U.S. Federal Reserve Chairman Alan Greenspan, testifying Wednesday before the Financial Crisis Inquiry Commission, reiterated that the supply of money globally -- not the Fed's monetary policy on interest rates -- was the primary driver of the extended low interest rate period that contributed to the U.S. housing market bubble, the bursting of which set in motion the financial crisis.

Remember the havoc in the financial markets when the residential bubble burst last year? Are we in for a rerun this year or next year?

You are probably thinking that such an event could not occur. Well think again. There is a report that says that we may be in for another crisis.

The report was initiated by Federal Reserve analyst, K.C. Conway. Conway is a senior real estate analyst at the Federal Reserve Bank of Atlanta. The Federal Reserve has acknowledged the report but said that it is not part of its formal opinion. What does the report say?

Robert J. Shiller's Irrational Exuberance is the classic book for understanding the stock market bubble of the late 1990s and early 2000s. His contribution to the study of real estate is equally compelling. The House Price Index used to track our real estate market was co-developed by Mr. Shiller -- and is innovative in that it adjusts for the quality of homes involved in transactions.

So given his expertise in bubbles and real estate, he is probably the guy to listen to when it comes to the topic of the real estate bubble.

In a column in this Sunday's New York Times, Shiller gives an interesting possible explanation for a question that hasn't gotten a lot of attention: Why were Alan Greenspan -- and a lot of other presumably intelligent people -- unable to see that real estate bubble for what it was given that, in retrospect, it seems so obvious?

The answer may lie in a psychological phenomenon known as information cascade. Be sure to read Shiller's column for an explanation of how this may have applied to the real estate market. It's fascinating stuff.

And understanding why the bubble wasn't widely detectable is key to understanding why it happened. As Shiller writes, "The failure to recognize the housing bubble is the core reason for the collapsing house of cards we are seeing in financial markets in the United States and around the world. If people do not see any risk, and see only the prospect of outsized investment returns, they will pursue those returns with disregard for the risks."

With so much negative news swirling around the housing market lately, it was a pleasant surprise to see some encouraging news surface today, showing that home sales rose in the month of July.

While we are still in a situation where home sales are down over ten percent from last year's levels, July saw a decent 2.8 percent jump in new home sales. This comes on the heels of a 4 percent drop during the month of June. Analysts had been expecting to see new home sales fall once again last month, so the increase, as small as it was, is definitely great news for the market.

Some of the reason why we are seeing the current increase in sales has to be attributed to falling prices for new homes. As I wrote about earlier this month, falling home prices should help to start to balance out the housing market, and hopefully this is starting to take effect.

Don't get me wrong... it's never good to be in an environment where people's homes are decreasing in value, but this may be just what the doctor ordered in order to bring buyers back into the market. The average price for a new home in July was $300,800, down from $311,300 during July of last year.

While there is no doubt that the housing market is still on very shaky ground, today's news is definitely a welcome treat, and hopefully signs of better things to come.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.

When I logged onto Amazon.com to check out the new releases in business books, this headline jumped off the page: Real Estate Sale: Save up to 39%.

The headline was followed by this: Whether you're a real estate professional or a first-time home buyer, find all the guides you'll need for becoming a landlord, finding a mortgage, selling properties, and investing in one of the most time-tested and popular strategies for building wealth, all at up to 39% off for a limited time.

Among the deals:

• Flipping Properties: Generate Instant Cash Profits in Real Estate, which is 33% off.
• How to Be a Quick-Turn Real Estate Millionaire, which is 35% off.
• Investing in Duplexes, Triplexes, and Quads, which is 35% off.
• Why We Want You to Be Rich, which is 37% off (this book would be a ripoff at 99% off, in my opinion).

Granted, most books are on sale at Amazon (NASDAQ:AMZN). That's why I love it. But it does seem a bit unusual that they're advertising especially deep discounts on real estate books. One possible conclusion: people aren't buying them. If we go with the theory that the bull market in real estate was in fact a speculative bubble, this makes sense.