Barry "Big Picture" Ritholtz: How on Earth was a strawberry-picker in California making $15,000 a year able to qualify for a no money down loan on a $720,000 mortgage? That is just unconscionable. Housing prices might not fall all at once, though -- they can just go sideways for twelve years and that's the inflation-adjusted equivalent of a 20 percent drop. It was so obvious it was going to fall apart eventually. What is so amazing is how long it took to actually happen.
From James Suroweicki in early November: The havoc on Wall Street following the collapse of the subprime-mortgage market boils down to a simple truth: for years, lots of very smart people took lots of very foolish risks, betting borrowed billions on dubious mortgage derivatives, and eventually the odds caught up with them. But behind that simple truth is a more surprising one: the financial whizzes made bad decisions in part because that’s what they were paid to do. One lesson of the current market chaos, then, is that it’s hard to get incentives right.
From 159 years ago, on incentives: It hits the poor, not because it wants to hurt them, but to frighten the rich ...
From a Financial Times op-ed by Lawrence Summers, in a popular thread from late November: Without stronger policy responses than have been observed to date, there is the risk that the adverse impacts will be felt for the rest of this decade and beyond.
Don't Fear the Bear | 
