[Daniel_Newby]

Clueless.

"I want to be clear here that the blame, to the degree that there was, is largely in the United States, not in Europe, not in Britain."

Because the American branch of the Illuminati run Iceland, Northern Rock, those German manufacturers who were having to finance their customers because banking disappeared, and so forth?

"And it was fundamentally because a low-interest policy created too much money. It was an easy-money policy and eventually an easy-money policy catches up with you."

Most of the bubble money supply came from leverage (massive fraud with a sprinkling of "deregulation"), not interest rates.

[teamonkey]

NRK collapsed due to buying US sub-prime mortgage deals. Buying them was a bad idea, and putting all its eggs in one basket was worse, but I think Schmidt is getting at the fact that these deals were available in the first place and no-one thought they were a bad idea. NRK is also small fry compared to Mae and Mac.

As for leverage/deregulation,

"So the banks are busy creating money and making a lot of money on that creation of money and the regulators were either, depending on your point of view, asleep at the wheel or did not have the tools to understand what was going on"

[hga]

At least a few people thought they were a bad idea, but Bush and his style of Republicans wanted an "ownership society" and Barney Frank and company wanted to "roll the dice". A nice bipartisan mess they've made ... although it should be pointed out that there were many housing bubbles and then busts (e.g. Ireland, Eastern Europe, Germany had to do some nasty real estate company rescues but I can't remember how much they were residential; heck, not counting basket cases like Japan, wasn't Canada about the only country to avoid a bank mess???).

Which suggests to me that there was an underlying problem (e.g. too much cheap money) and real estate was just where that happened to bubble up. And it's a particularly destructive area, the dot.com (actually mostly telecom) bubble was much less worse for the nation at large, bad though it was for us.

Bottom lin: there would have been a bubble somewhere.

[pieceofpeace]

Yes. Also, don't forget the role of rating agencies. They should get a lot of the blame for this mess too.

[graphene]

The whole point is that leveraging (i.e. investing with borrowed money) becomes much more feasible when interest rates are close to zero, as they were in the early years of the boom.

[patrickgzill]

The USD is functionally the reserve currency of the world; perhaps that is what he is referring to?