You're absolutely right about these financial "instruments" and the financial institutions who invented them. But we're drifting a bit from the original topic of this which was: Why the housing bubble inflated, and why it burst. All of the shady institutions in the world couldn't get me to sign a mortgage contract that I couldn't easily afford even if there was a financial hiccup in my life. But many people did just that, and that's why the bubble inflated. And when I do sign a contract, there is no way I could live with myself if I just walked away from it. But many people did just that, and that's why the bubble burst.

It's obvious these days that my belief system is archaic. I understand that. But what I don't understand is how people can now be crying about banks having tons of money, but not wanting to lend. Banks require society to have a moral compass when they sign promissory notes. When society loses that moral compass, banks have a fiduciary responsibility to be extremely cautious.

Carl