On Feb 7, 2011, at 8:15 AM, SA wrote:
> It was the hysterical forecast of price appreciation, not the "hiding" of risk
Not exactly. Goldman and the rest packaged dud securities and sold them to clients at the same time they were shorting the crap. They even shorted Bear Stearns' stock after Bear bought one of those turkeys. Also, in a bubble, people often can't see what should be obvious - that the forecasts were insane. Something like a negative amortization loan with low introductory teaser rates - in which the first few years of payments don't even cover the interest bill, much less reduce premium, only to be followed by a sharp rise in the interest rate - is clearly lunatic, but supposedly sophisticated people shoveled cash into them anyway. There are none so blind...
> an ongoing housing bubble "from below" to invest in.
It could never have happened had the credit not been available.
You're also underestimating the degree to which mortgage bankers hawked their products. It was an extremely aggressive sales effort, involving all the blandishments of American life - seduction, temptation, lies.
Doug