I stumbled across an excellent radio program that puts a human face on all the players in the current mortgage crisis. To listen to the program, follow this link to This American Life and click on the “Full Episode” link under the picture of curled US dollar bills.
During the radio program we hear from borrowers who didn’t have to show any credit worthiness, a broker who aggressively sought out borrowers without caring whether they could pay back loans, and other players up the food chain packaging mortgages into investments for the $70 trillion world-wide fixed income market that hungered for higher returns than US treasuries.
Over the course of many steps, a half-million dollar loan to someone with low income was merged with other bad loans and transformed into an AAA-rated investment. This story is part stupidity and part greed. Unfortunately, both parts are extremely large.
It’s easy to listen to this radio program and get discouraged. Are we all just greedy idiots? On the other hand, we still have too much food to go around and far more clothing for sale than we could possibly wear out. Life is pretty good whether we’re greedy idiots or not. For most of us, unhappiness is driven by envy of our neighbours rather than actual need.