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the problem lies with a fake economy propped up on a highly leveraged investment model. It was the same thing that caused the economic collapse of 1929. There was no room for a downward movement in valuations. In 1929 people could by stock with 97 percent on margin. When the market dropped slightly they could not cover their margin call and were more than wiped out.
The sub-prime mortgage market worked because people writing mortgages at a low percentage leveraged the money so while the homeowner paid a low percentage, say 3 percent, that percentage was multiplied 30 to 40 fold and spread over brokers, banks, investment firms and investors.
The low interest rates caused house prices to rise because ever more people could qualify for ever bigger mortgages, all highly leveraged, leading to a seller's market. Too much money chasing too few houses. Somehow there was an expectation (or perhaps not) that there would never come the day of reckoning. It came in the form of mortgage resets. The part that was not leveraged went away and started eating into the leveraged amount. In the mean time, the guys who invented and sold this whole scheme took their commissions.
Of course all of this could not have been possible without republican deregulation.
Phil Gramm, the Father of the Economic Collapse of the 21st Century.
So while banks benefit the most, the rest of us benefit because the economy will not totally collapse, wipe out what wealth we do have and throw nearly us all out of work, or at least reset the minimum wage to 20 cents an hour.
In the meantime, if the excesses are reigned in by judicious regulation, we can repair the imbalances in time. If the answer is to deregulate more, we have put off the Mad Max world only for a little while. And in that case, the 1 or 2 trillion dollar cost won't matter anyway.
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