I only post late at night, so I apologize if this response to your post is repetitive – I can’t recall the last late-night ‘conversation’ I had with you.
Picking on Paulson or some other financial intermediaries as the root cause of this mess is probably not correct. I think history will show that it was millions upon millions of homeowners who wanted to ‘save’ for retirement using a free lunch method – borrowing other people’s money and using it to buy assets that only increase in price – that drove the madness of the last 5 years.
In truth, I think baby boomers looking for the free lunch way to save for retirement are the root cause of our repeated asset price bubbles in the last 10 years. Unfortunately, they are a big enough group to vote the Congress that accommodates them, and the Administration that accommodates them. All the other groups (mortgage brokers, investment bankers, regulators, real estate agents, stockbrokers etc.) are just following the money incentives to please the boomers.
I could be wrong, but I think we’ll only know for sure when history is written 20 or more years from now.
