Gosh, Who Might be Responsible for the Subprime Mortgage Collapse?

Niall Ferguson gives a lucid enlightening excursion through "Planet Finance" and halfway through manages to unearth the culprits in the "subprime market meltdown." The article is a follow-on to his brilliant Empire Falls piece in Vanity Fair in 2006. Here is a punchline from his latest view from Mt. Olympus:

Significantly, a disproportionate number of subprime borrowers belonged to ethnic minorities. Indeed, I found myself wondering, as I drove around Detroit, if “subprime” was in fact a new financial euphemism for “black.” This was no idle supposition. According to a joint study by, among others, the Massachusetts Affordable Housing Alliance, 55 percent of black and Latino borrowers in Boston who had obtained loans for single-family homes in 2005 had been given subprime mortgages; the figure for white borrowers was just 13 percent. More than three-quarters of black and Latino borrowers from Washington Mutual were classed as subprime, whereas only 17 percent of white borrowers were. According to a report in The Wall Street Journal, minority ownership increased by 3.1 million between 2002 and 2007.

He also lays the original idea for low-cost mortgages at the door of the clueless eff-up Jimmy Carter, though there is a lot of blame---Barney Frank and his "husband" at Fannie Mae in the early 90's making the country assume the position for their perv gyrations in the housing market are left unmentioned.

In addition, derivatives and hedges based on math models that conveniently omitted the Crash of '87 and the Great Depression were employed to create another "Extraordinary Delusion [due to] The Madness of Crowds," as Ferguson quotes Mackay's 19th c. perennial classic which the tabloids and their ink-stained wretches perennially neglect. Sadly, many half-dead branches have been pruned and the proligate USA no longer will have China supporting its ridiculous spending habits.

The whole article is extremely clear and devoid of the PR-hack journalism of tabloids like the NYT. And Detroit is a human sewer that deserves Iverson and the Lions!