When the New England economy first started to slow in 1988, a few prescient individuals would occasionally raise the possibility of the region going the way of Texas, which was suffering a serious economic downturn and a real estate bust at the time. Such an outcome seemed most unlikely for New England, however. The decline in the Texas economy was precipitated by an adverse economic shock, falling oil prices. New England had suffered nothing comparable.

Today New England looks more like Texas. Real estate woes have been devastating and, in terms of job loss, the overall regional decline surpasses the Texas downturn in severity. Why were the New England and Texas booms in real estate followed by busts, whereas the California boom was not? Where were the signs of problems ahead? What lesson might New England have learned from the Texas experience, had closer attention been paid? And what lessons might other parts of the country learn from the common difficulties of these two very different areas?