[quote=HLS]The list of the most responsible in declining order:
Govt: allowed “IT” to happen without intervention.
The drug cartel
The growers
The middlemen
The dealers
The street pushers
The users

Nobody held a gun to the end user and made them inject/snort. If the govt had required skin in the game over 50% of mortgages would have never occurred. 100% financing was THE main cause.
Greenspan and low rates weren’t the problem.
Rates are lower today and there is no housing bubble.

The true criminals: Barney Frank, Chris Dodd, etc.
Hanky Panky Paulson did a perfect job of raping the taxpayer without using KY jelly and transferred wealth to his Wall Street buddies.
AIG was given billions so that Goldman Sachs could be paid for gambling on CDS’ and Lehman Bros was allowed to fail because they annoyed/crossed Paulson on the way up.

Never forget: Foreclosures are not the problem- Foreclosures are the solution. HLS[/quote]

Very much agree with this and with UCGal’s post.

The only thing we differ on, HLS, is the effects of low rates on the housing market — or asset prices, in general.

Low rates encourage more risk taking as investors go further out on the risk curve in the pursuit of higher yields. This is what facilitates easy lending. IMHO, when rates are high, cash is more valuable, and investors will be more circumspect WRT where and with whom they invest or lend.

Even though credit might be “tight” right now, the low rates are forcing investors/savers into the housing market. IMHO, many/most of these all-cash investors we keep hearing about are chasing the market because they can get a higher yield via rentals (all-cash purchases) versus any kind of bond or savings vehicle with an equivalent risk profile.

Also, since lower rates initially allow more buyers to enter the market (until prices rise to make up for the difference), demand can be increased in a low-rate environment.