DWCAP: “Why do people keep needing the GOV to “save” us? I dont want the government to save me. I dont want the government deciding who deserves a house and who doesn’t (read: has to pay inflated prices).”

I agree 100%. It is true that risk in financial institutions was poorly regulated. Regulations should have thoroughly exposed all the risks. They didn’t. If they had forced such disclosure, markets would have forced the companies taking too much risk to stop. In future, companies and industries that take on risks that rely on bubbles not bursting should be spotlighted immediately and continuously until the market exuberance causing the pressure comes to its senses.

I am convinced that a very big cause of the housing bubble was govt intervention in the housing market. Without a deduction for mortgage interest, without FNMA, Freddie Mac, FHA loans or loan guarantees, without govt pressure on banks to lend to poor risks, without any of a myriad other govt-backed programs to funnel more and more money into housing, the bubble would have been much smaller, and would have deflated much earlier and quicker.

With little or no govt involvement in the housing market, and with vigorous govt-required disclosure of financial risks, grounded on leaning against cyclical ups and downs, the housing bubble would have been innocuous.