The Final Word in Blame

The blame for all of this financial turmoil lies with the US Government lock, stock, and barrel.

Beginning with the New Deal in the 1930's when Fannie-Mae was created to social engineer FDR's desire to support "every man owing his own home..." When this started, it sounded great, but it began the slide toward government fiddling with the financial systems.

It continued with the Great Society of the LBJ years that privatized Fannie-Mae with the status of GSE (government sponsored entities) so that they could increase the risk profile without worry since the "full faith and credit" of the US Government was backing their portfolios.

It culminated in the CRA of 1977 (remember President Carter's great social engineering proposal) where politically-motivated community organizations like ACORN could and did bully banks into lowering their lending standards to allow lower-income, inter-city borrowers to buy home they couldn't afford, but could use the rising real estate market valuation to make money by holding the real estate properties just long enough to make some equity.

Remember, the real estate market created a bubble because of the easy to get loans created by the CRA and lower interest rates of the post-2001 environment.

When the real estate bubble burst and interest rates rose, all the government-protected GSEs (remember Fannie and Freddie), and the mortgage-back securitizations (remember Bear Sterns, Lehman Brothers, Countrywide, WaMu, Wachovia, etc) along with their so-called insurance protection (remember AIG) providers came down like a house of cards.

Thus, the blame goes back to the bleeding-heart liberals that believe you can social engineer the human condition. All you ever do is with social engineering is open up the door to deceit, fraud, and failure. By why take my word, DYH (do your homework), the USA has done this to itself over 6 times before between the Civil War and WWII.

It appears that the USA never learns, but the sheer size of this stupid move may be more than even the USA can handle.