The "moral hazard" is when government underwrites your risk, therefore enabling you to take risk that you would not take, and such that the taxpayer is now absorbing your risk. IE: You can make a "mistake" and its not your problem. There may have been poor decisions made by many people throughout the housing bubble, from the poor sap who paid too much for a house, to such entities as Merrill Lynch who ended up holding too many MBS's. Those were not "moral hazards". Just bad business decisions. Spare me the nonsense about FF losing some market share. The bubble was well entrenched then, and they then changed their own friggin rules to then recover their share of the BS.
BS. The "dot-com" bubble was due to the creation of the internet, and folks having computers.Nonsense. Did you forget about the dotcom bust? Large tax cuts almost always lead to asset bubbles, and this was no exception.
Yup.Well that was certainly a completely lame non-refutation.
The oldest rule is "buyer beware". You, the buyer, are ultimately responsible. There were people saying it was gonna pop. There were investment firms that got out of MBS's in time. I have a good friend who bought a house for sale on his street in 2006 so as to rent it out for 3-4 years, then flip it, and "make a bundle". Well, he lost his shirt.I was thinking specifically of the people and institutions that purchased mortgage backed securities. In many cases the underlying assets were hugely risky, but the credit rating agencies nonetheless gave them AAA ratings -- as safe as can be. Given the fact that the derivatives market was -- by law -- unregulated, that was all invstors had to go on. Without investors willing to by all that worthless MBS, the bubble would not have occurred.
In addition, however, many unsophisticated home buyers were also misled as to the terms of their contracts. That was facilitated by the OCC which specifically preempted the states from enforcing their own consumer protection laws in the mortgage market.
Q: Whose fault is that ?
A: His own.