reply to post by Moonsouljah
The private sector thought that was a good idea. I'll tell you why, in case you've been sleeping for the last 2 years: Subprime mortgage securities
and related derivatives (including insurance policies sold by AIG, which could never be payed in the event of default).
The "market" found a clever way to make subprime mortgage's profitable for investors. As it turns out, though, the market was very wrong, and their
clever securities wound up being worth nothing (despite being rated AAA).
Worse than that, there was a housing bubble. Trillions of dollars were misallocated into housing, over several years time. But again, this was deemed
perfectly acceptable by the wizards on walstreet (as well as their investors (aka, "the market")) who figured out how to make it all stable and
profitable.. the only catch is that they totally screwed up, and ended up crashing the world economy.
The government had nothing to do with the massive misallocation of capital (otherwise known as a bubble). And don't tell me they incentivized this.
The govt never forced anyone to make a loan, nor did they securitize the mortgages, nor did they misallocate trillions in capital in the housing
market, etc. This is a pure fault of the market, which there are many, and there will be many more (or do they not teach that in schools, anymore?)