> although probably outside the core area of residential real estate
> and closely linked areas, not as rotten as people think when they go into
> panic mode.
This is one strand of the story. But there are two other, equally important stories. As Roubini has documented in copious detail, (1) the shadow banking system is in deep crisis, due to unregulated, Wild West speculation undertaken by mutual funds, hedge funds, equity players, etc. They are all basically banks (borrow short, lend long), but were completely unregulated and ran off the rails. (2) The US current account deficit is financed almost exclusively by foreign central banks (China, Russia, petro-states).
Neoliberalism was a vast speculative bubble with OPM (Other People's Money) which waged war on labor, plundered two-thirds of the planet, and bought off the US electorate via the promise of eternally rising stocks and then eternally rising mortgages. So, yes, the problem isn't a few criminal actors. The whole system was a criminal scam.
Which is why this election is so important. Obama is no radical, but he does have the skills to convince the sovereign wealth funds of the semi-periphery, East Asia, and the Eurostate to finance an orderly, if painful, bailout. If the petro-fundies steal another election, the train goes over the cliff.
-- DRR