On Sep 16, 10:26*am, Wayne.B wrote:
....
Sub-prime was dreamed up because there was only just so much
legitimate mortgage debt to go around. * The whole business of
packaging debt and then selling/securitizing it via bonds was highly
profitable while the fun lasted. *...

If you need one person to blame it is Alan Greenspan. But, at a macro
scale I think sub-prime was a symptom rather than the root problem.
The problem writ large is that real wages haven't kept pace with
industrial growth. The distance between what consumers can afford and
what producers need to sell has every increasingly been bridged with
consumer credit. As traditional credit sources backed by well
understood collateral were used up "innovative" lines of credit, like
sub-prime and many new "derivatives", were created to support a
"healthy" growth rate. Rules that were put in place in the last
great consumer credit crunch have been loosened all around to maintain
liquidity. The result is that this correction comes with an
unprecedented amount of leverage. The scale and depth of this crisis
is daunting but it is fundamentally a question of balancing
consumption and production. Blaming greed is like blaming gravity;
they're just part of the structure of the world and they are with us
always in good times and bad.

-- Tom.