Your article had a lot more credibility before you came up with this comment : The vast majority of RMBS and CDO-of-RMBS losses have nothing to do with the government.
Your story would have been even better if you included the necessary element of how the repayment characteristics of selling beer to unemployed people on credit were better than the interest rate they would pay. Because, as a foundation to these securities, the banks (based on flawed rating agency analysis) believed that the subprime mortgages would pay back.
If the banks had had a better understanding of how past performance (subprime mortgage payers in the 1990s) was no indicator of the future (people in 2005 buying investment properties to flip, based on the theory that property prices would increase at 4% p.a. forever), then they would have lost so much money that they required bailing out.
The major post-crash failure of government (IMHO) is that they didn't take large equity stakes in the banks, and prevent them from making obnoxious bonus announcements.
Your story would have been even better if you included the necessary element of how the repayment characteristics of selling beer to unemployed people on credit were better than the interest rate they would pay. Because, as a foundation to these securities, the banks (based on flawed rating agency analysis) believed that the subprime mortgages would pay back.
If the banks had had a better understanding of how past performance (subprime mortgage payers in the 1990s) was no indicator of the future (people in 2005 buying investment properties to flip, based on the theory that property prices would increase at 4% p.a. forever), then they would have lost so much money that they required bailing out.
The major post-crash failure of government (IMHO) is that they didn't take large equity stakes in the banks, and prevent them from making obnoxious bonus announcements.