Over at SLOP, Scott Lewis wonders what I think of developer Sherm Harmer’s assertion that nobody anticipated the troubles in the subprime mortgage market. Scott quotes Harmer as saying, "We did not anticipate the subprime financing issues," and then, referring to those issues, "It was not on anybody’s radar screen. It surprised the best banks, the best investors. No economist predicted that."
Here’s what I think. The subprime financing "issue," in a nutshell, was this: lenders had been making loans that were very unlikely ever to be paid back. Then they stopped.
Anticipating that second part just doesn’t seem like such a stretch to me.