It’s one thing to criticize McCain for inaction, but I disagree with Obama’s claim that we know how we got into this mess. In fact, if pushed, I would say I knew a lot more about the causes of 9/11 than I do about the causes of the mortgage crisis.Or, call me wacky... how about, if all the greedhead punters who bought the bonds that backed the sub-prime mortgages had said... "Hey... wait a minute..."
I just read Robert Shiller’s excellent book, The Subprime Solution, and he makes a powerful case that the end of the price bubble in residential real estate was the crucial triggering factor.
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RELATED: Hmmm... what about "Monkeynomics"
Once upon a time in a place overrun with monkeys, a man appeared and announced to the villagers that he would buy monkeys for £10 each.(via reader bob)
The villagers, seeing that there were many monkeys around, went out to and as supply started to diminish, they became harder to catch, so the villagers stopped their effort.
The man then announced that he would now pay £20 for each one. This renewed the efforts of the villagers and they started catching monkeys again. But soon the supply diminished even further and they were ever harder to catch, so people started going back to their farms and forgot about monkey catching.
The man increased his price to £25 each and the supply of monkeys became so scarce that it was an effort to even see a monkey, much less catch.
The man now announced that he would buy monkeys for £50! However, since he had to go to the city on some business, his assistant would now buy on his behalf.
While the man was away the assistant told the villagers. 'Look at all these monkeys in the big cage that the man has bought. I will sell them to you at £35 each and when the man returns from the city, you can sell them to him for £50 each.'
The villagers rounded up all their savings and bought all the monkeys.
They never saw the man nor his assistant again and once more there were monkeys everywhere.