Koan, It was that banks around the world realized they could not mark to market because no one knew what was in those bundles of shit loans stamped triple AAA by Standard and Poors and Moodys? Of course that was the primary reason, but the bottom line is that people were free to say no.
Instead, everyone was caught up in the whole real estate craze, thinking that they had to go out and buy homes, especially homes that they couldn't afford partly because the bubble had already grown so big. Banks were only too happy to give them loans, saying, "Oh, you don't need proof of income. Just state it. As long as your credit is fine, we'll believe that you make as much as Kobe Bryant."
No one asked, "Well gee, why are you just giving me these loans?" No one asked, "Well gee, you think maybe this house is a little too expensive?" No one asked, "So what happens if I ever become upside-down on my mortgage?"
Who's responsible for giving honest answers to these questions before it becomes hindsight? The government? Give me a break, they can't predict the future any better than the Mayans. Besides, they were helping to inflate the bubble anyway. Even the Democrats who now blame it all on Bush had a major hand in enabling all of this.
Regulations could have prevented this, but most regulations are crafted after the fact. No one really had the foresight to stop what happened. And if someone claims otherwise, I'll say, "Prove it."
Tenchusatsu |
