Your World In Stick Figures

This Web comic about the credit mess is really the most lucid explanation of exactly what happened to the housing market. I pretty much knew what was going on but this made it a lot easier to interpret. Basically the investment banks tried to put together a pyramid scheme, knowing that it was fated to fail but hoping that they were more clever than everyone and nobody would find out, and the housing market would hold out at the historically anomalous levels it was headed in 2004-2005.

Now fingers are pointing all over the place, and as this WSJ article makes clear, it's a complex picture. But what I get out of it is that nobody wants to talk about regulation in good times, and everybody wants to talk about it when things go to shit. This wasn't just an issue with subprime mortgages but all mortgages, which were built on wrong assumptions that everyone can just refinance and keep out of the danger zone when rates reset. I remember being told in 2005 when I was looking for a house that "nobody gets a fixed mortgage anymore." That was the mentality from the banks, the lenders, the investors. The goal was to shovel more and more people into home mortgages. Everybody looked good; government, industry, financial institutions. There was no check on this forward motion, the regulation that was needed. Unregulated capitalism will always step in the "Shitpile" this way.

UPDATE: This is really shocking to the conscience (via SadlyNo)



I don't think we have a full appreciation of what's really happening in these exurbs. This is a crime.