@McGentrix,
Mcg, the housing market operates under very well-understood cycles of boom and bust. There literally exists no period in history in which there were not rises and falls in the market.
Eventually, we were going to reach a point where the market would have a significant amount of defaults on mortgages regardless of whether or not we had sub-prime lending. This is a fact.
Building a business model - the trading of mortgages as securities - which relies upon the continual rise of value in homes, and the continued rate of low defaults on mortgages, was foolish; yet that's exactly what they did. Nothing unusual happened in this housing cycle, though it was more pronounced then in the past. What was unusual was that the mortgages that started to go bad were owned by
everyone in the market, and not just the traditional mortgage holding banks and companies.
Let's say a scheme was devised, where a financial product was created based upon the stocks of several companies and a bunch of leverage. As long as those companies kept going up in value, the product was in great shape; and for several years that's exactly what happens, and it's very, very profitable, until the entire financial sector has a piece of that action. And then the companies start to falter, as the business cycle asserts itself; suddenly everyone is left holding a pile of massively over-leveraged crap, and owe much more then they have money for; and they can't find anyone who wants to BUY the crap, because nobody is looking to catch knives.
So in this instance, you would blame the
companies in question for the overall market failure? Poppycock, I say! Companies go up and down; mortgages and their rates of default go up and down. Housing values go up and down. This is a fact of life.
You are ignoring the fact that the ONLY difference between this cycle and the other ones we've seen before, are the laws which allow the collateralization of mortgage debt. You are ignoring the fact that MANY if not MOST of the problem has stemmed from upper-income buyers and 'flippers,' who gambled on some very, very expensive houses and lost out big time. And it's obvious why you are doing this: because it's easier to just blame the Dems and poor folk then it is to blame the Republicans and rich white folk.
It doesn't show that you have a good understanding of the issue, though. You've latched on to the Conservative-blog 'blame Clinton!' line, as if somehow the banks were forced to
re-package the mortgages as securities and sell them off to the financial sector. Please. Even if the subprime loans to poor folk were a bad idea, nobody forced the companies to put those pigs in a poke and sell them, nobody forced hedge funds and financial trading houses to leverage these products 30 to 1, nobody forced them to make such poor investment choices - but someone DID allow them to do it, and that's the Bush administration, and the laws championed by Phil Gramm.
I once again ask you: do you even know what the credit-swap market is? For if you do not, you don't understand the problem at all, and if you did, you wouldn't be going on with the foolishness that you are.
Cycloptichorn