| I know you read stories about the strawberry picker who can't speak english "pressured" into buying the million dollar home, but those cases were extremely rare. The industry which sprung up around CDOs did two extremely dangerous things: 1. Because of the demand for mortgages from the CDO industry, created an incentive for lenders to make as many loans as possible. 2. Disconnected the people who were actually issuing the loans from the consequences, if and when the borrowers defaulted (since the actual lenders could immediately sell the loan into the CDO-bundling food chain, thus recovering their money so they'd no longer need to worry about the loan being repaid). The combination of the pressure of (1) and the lack of consequences in (2) meant lenders drastically relaxed their policies, issuing loans to people who they knew they never would have lent to if they (the lenders) were going to be on the hook financially in case of default. Meanwhile, it has been demonstrated beyond doubt that the larger entities which were offering CDOs to investors were promoting them as high-grade investments, with help from ratings agencies who either utterly failed in their function or were themselves complicit in the deception, even though those entities knew otherwise and were taking their own private actions in the market, aimed at profiting when (not if) CDOs failed to perform as advertised. The result of this is was a large-scale transfer of wealth, largely from duped investors and duped borrowers (for make no mistake: knowingly issuing a loan to someone not qualified for the loan is a form of duping), largely to a relatively small and select group of people who were either involved in the lending and bundling food chain, or in offering CDOs to investors. These are not memes. These are facts. This was a massive fraud perpetrated upon multiple groups. You can, if you wish, say that the desire to play real-estate mogul or conspicuously consume played a part in driving people to take out loans, and assign some part of the responsibility to those people. You cannot, however, support in any way, based on the known and undisputed facts, the assertion that the borrowers bear (to quote precisely the original words to which I replied) "the majority of the blame" for this. The deliberate and knowing fraud in the CDO industry outstrips that as the noonday sun does a candle. |