“Consumer debt both as credit card debt and as home equity loans used to consolidate credit card bills, has doubled since the 1990 contraction in a period of sustained growth in GDP and employment. Simultaneously, personal bankruptcies and credit card charge-off rates have also risen to record levels amid intense competition among hundreds of credit card issuers. The thin spreads of issuers and high leverage of consumers creates a metastable system which will be unable to sustain even a small economic downturn without significant volatility, attrition, and social cost.”

These two especially:

The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.

Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.

Sum up the first one as :the community reinvestment act.

Australia has pretty much the same sort of policies and tax breaks for homebuyers. One thing that is different though is that our government does regulate the financial sector quite a bit more. In America the current government seems to let big business (including banks) do what it wants. If you do that then big business will do what it wants and naturally consumers will lose out.

We all had a hand in it.

Some on the list I would disagree with too. I think this collective delusion that housing prices would continue to rise forever is silly. Financial experts knew better, there was just no financial incentive to prepare for it.

And some of these things may have had more weight than others. Tax deduction on mortgage interest has been deductible as long as I can remember, hard to figure how that suddenly caused the housing boom and bust. I’d take exception to that. The ‘mark to market’ thing is certainly an issue, but only once things got so bad that there was no longer a functioning market for mortgage backed securities.