Quote:
Originally Posted by dennisw
I think to a degree we're missing the threshold point. Where were the shitty loans and all the greed before the credit rules were changed? Before the rules were changed, you couldn't make shitty loans. Changing the rules was the pivotal event. Without it, there is no mortgage meltdown.
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I think that you're making a counterfactual argument that may do as much to confuse our understanding of the financial crisis as it does to clarify it.
IIRC, for years before the housing bubble burst,
The Economist was sounding the alarm about other issues. To me, the big picture was one of capitalism in service of the public good tilting towards predatory capitalism being used by those who were exploiting the rules of the game and bringing 'products' to market so they could make as much money as they could, consequences be damned. Concurrently, there were widespread examples of wishful thinking in which expanding markets would continue to spark growth and people would ride the wave to where ever they wanted to go.
Insofar as the rules themselves being responsible for one or more aspects of the meltdown, I'm not convinced. Somewhere along the line, the choices of individuals and institutions matter. Nothing stopped people from using their administrative discretion to follow the rules in ways that balanced the requirements of the rules, the goals of an institution, and the interests of clients. In short, I'm saying that too many Americans made the choice to behave like used car salesmen working for commissions than like consultants working to build long term relationships.