It is five years since the 2006 peak of the great housing bubble and time to re-state the repetitive lessons of financial history. Our recent financial adventures are memorable, but will they be sufficiently remembered?

The banking industry suffered credit crises in the 1970s, 1980s, 1990s, and 2000s. An unavoidable conclusion is that its loan loss reserves were in all cases too small. 

A systemic risk advisor might help ameliorate bubbles and busts, though not avoid financial cycles.

How do groups of intelligent, sophisticated bankers, investors, borrowers, entrepreneurs, and traders find themselves caught together in the recurring bubbles and busts?

The recent period of bubbles, busts, and bailouts--with lessons for improving the financial system.

Since no banker, or regulator, or politician, or fund manager, or rating agency, or accountant, or economist can know the future, the long historical series of financial mistakes called bubbles and busts is bound to continue.

Despite the inevitable cycles of booms and busts, capitalism remains unmatched at creating economic well-being for ordinary people. Its volatility is the very quality that makes it a successful economic system.

The fat years of the housing bubble lasted from 1999 to 2006 - seven years. The bubble was deflating by the beginning of 2007 and collapsed into the panics of 2007-09. Since then we have been struggling in its deflated wake. If we get the Biblical sum of seven lean years, the housing and related debt markets will bottom in 2013 - not a bad forecast.