The Credit Meltdown - Whose fault? A simple explanation

From the content of your post i would assume your sources support what I believe is the most plain and simple truth. The blame for the credit meltdown is shared by almost everyone in this country. The people for taking out loans they can't pay back, the banks for allowing them to take out the loans they can't pay back, the politicians for telling them to let people take out loans they can't pay back, the special interest groups for lobbying the politicians to do this, the incompetent boob who was supposed to oversee the idiotic loans, the president who appointed the moron, etc. I could really go on for much longer but I think anyone reading gets the point. Frankly, I think to some degree the government just gave people what they thought they wanted. The reason we have elected officials is because we as people should know that most people are morons and we try to elect smart people to keep said morons from ruining themselves and our country. Unfortunately, the government gave in to these morons and allowed greedy businesses to do stupid things in the hopes it would make everyone happy. It failed.

There were many contributory causes to this credit meltdown, mainly connected to the housing bubble. In the UK we know about housing bubbles, big time. The oh so famous Margaret Thatcher was a big contributor to this when she initiated the sell off of 100,000s of council houses (owned by local government districts or councils) at discount prices, according to how long the tenants had lived in them. I think that in recent years the story in the UK has been very similar to the US. Building Societies (S & L institutions) and Banks have been lending money on higher and higher multiples of people's incomes, making 125% mortgages (yes, no deposit and then some). These institutions have also been able to borrow short-term (!) money from abroad to top-up their funds for lending (our Northern Rock bank was particularly affected by this - the one the government took over). In London you would hear of say a bunch of four friends getting together to get a mortgage on a house to share together. About the last straw to break the camel's back were buy-to-let mortgages, which has now done for our Bradford and Bingley. Looking at history, booms and busts seem to be a fact of life. What seems to be becoming clear now, is that we're probably in for a MOTHER of a BUST!

The answer to why this is all happening is even simpler. The government interferred with market driven economics. If banks had not been encouraged(read that as threatened) into making loans to folks that could not afford them in an affirmative action style plan for folks with sub-par income and credit there woudl not have been as much bad paper floating around in the first place. If the banks we left to their own devices they would have been making better loans percentage-wise so they would be more solvent and the securities that were backed by the mortgage assets would be solid loans that will actually be paid back rather than defaulted. Let the market contend with itself. Less interference more free market and all will be fine.