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Subprime mortgage (Image: Shutterstock).

After the subprime-mortgage mania of the 2000s ended in a global disaster, the U.S. government took steps to improve the way it manages the financial system. Now, a boom in a different market — call it subprime corporate debt — is demonstrating how much remains to be done.

The credit cycle follows a familiar pattern. After a crisis, lenders and investors are cautious. For a while. Eventually, their attention slackens as they take on bigger risks in their quest for better returns. This makes it easier for borrowers to get overextended, paving the way for the next crash. The more excessive the debt, the greater the potential economic damage.

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