Originally Posted by Carl Spackler

I know this is going to sound hardass in this day of undeserved self-affirmation, but none of the financial and investment misjudgment you've stated here caused the extreme home valuation rise...that was caused by the home buyer who agreed to buy their homes at prices that were almost doubling every two years when inflation was not. When buyers are willing to pay any price for something, a bubble will ensue.

Also, none of the financial and investment misjudgment you've stated caused home valuations to collapse. That was caused by people walking away from their contractual promises to pay those mortgages when home prices stopped doubling every two years. Mom and pop speculators were buying as many homes as their leverage would allow, betting that prices would continue to skyrocket. When the speculators walked away from their promises to pay, the bubble burst. Now we have websites devoted to teaching you how to walk away from a mortgage you can afford, but to free yourself from a home you've paid too much for. Its an outrageous example of what happens when too many of us lose our moral compass. And banks have noticed this missing moral compass. Thus loans have dried up. This should come as no surprise to anyone.

Carl