Economics 301

The trouble with this story is that it perpetuates the myth that the failure was caused by providing credit to "unemployed alcoholics." The vast bulk of mortgage backed loans were made to comfortable middle class employed people who don't have a clue about the effects of compound interest and how rapidly their payments would escalate into the unaffordable by bankers who did understand this, didn't care and were not:

1) legally obliged to take their net household income into account and not exceed 30% of that value in total repayments to all lenders - irrespective of interest rates.

2) legally obliged to provide insurance for mortgage repayments while the house owner is unemployed.

3) legally obliged to provide a schedule of expected payments showing date, payment amount, interest serviced by payment, capital debt reduction by payment, for the life of the loan allowing people to compare it to their expected income to determine affordability.

Just those 3 measures, none unfair, would have prevented both the "housing bubble" and limited the harm from the inevitable collapse caused by the Bush Wars drawing too many resources and far too much value from the economy and giving nothing back to it. They would also have prevented the bankers from raping the world by screwing 15 to 40 years of profits out of the market in just a few short years, money we will be repaying for decades. Most significantly, they would have prevented the collapse which has led to an unemployment rate exceeding 20% (despite some 1.4 million employable people being removed from the economy to engage in foreign wars), meaning that many of those previously employed and able to pay their mortgages are now unemployed and unable to do so. Whose fault is that?