Reply #46: It's in the mix -- but a completely insignificant part of the problem [View All]

[nichomachus]

Had the economy and the markets been healthy, it would have just resulted in a much-needed correction in housing prices, part of the normal market swing in these things. Some home buyers who went in over their heads would have been hurt -- as always happens in these things -- but we would have come out of it in a year or so. This is what happened in the late 80s, early 90s. The housing market rebounded within a couple of years.

The problem this time, as some many others noted, were the funny-money securities being generated by the "experts" off of the housing bubble. When you take out 100 insurance policies on the same mortgage, which is pretty much what they were doing, you're headed for deep shit.

But, the ultra-wealthy and the top-level thieves are trying to pin the whole thing on a construction worker in Duluth who took out an adjustable mortgage on an overpriced house.