Propping up housing prices instead of focusing on keeping people in their homes through principal adjustment
really was a mistake. I think the powers that be never really deviated from the idea that this was a just a liquidity problem sparked by irresponsible poor people, they never really got that a housing bubble meant that prices had deviated from fundamentals. As I've said many times, the obvious tip off to me, especially looking at a place like Southern California, was simply that I know that there aren't enough people who make enough money to afford those prices.
