Who's to blame

You, my high denominator readers alreadly know these things but Barry Ritholtz destroys the GOP's big lie about the 2008 meltdown so efficiently. The bullet points make for an effective counter to the "it's the government's fault for forcing the banks to lend to those poor people who can't afford houses" fallacy you're likely to hear at holiday cocktail parties.

The most useful:

The boom and bust was global. A McKinsey Global Institute report noted “from 2000 through 2007, a remarkable run-up in global home prices occurred.”

So no causation. US policy is unlikely to have affected the international housing market. However, this is a better hypothesis for domestic causation.

Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom.

Private lenders not subject to congressional regulations collapsed lending standards. These firms had business models that could be called “Lend-in-order-to-sell-to-Wall-Street-securitizers.”

It found that more than 84 percent of the subprime mortgages in 2006 were issued by private lending.

Their default rate was much higher than regulated mortgage providers. Also the default rate in the poor, urban redline zones was much lower than in the overpriced subburbs.

As Barry says in original post:

Wall Street has its own version: Its Big Lie is that banks and investment houses are merely victims of the crash. You see, the entire boom and bust was caused by misguided government policies. It was not irresponsible lending or derivative or excess leverage or misguided compensation packages, but rather long-standing housing policies that were at fault.

Obviously, the Big Truth is the opposite narrative.

[More posts daily at the Detroit News.]