Greenspan (regulators): for he kept interest rate too low (1%) for too long, during the recession after dot com bubble.
Bush (politicians): for his failed Iraq war which cost American tax payers more than 500 billions so far. He asked American “go shopping” after 911, in addition to buying a car or a house. Democrats are no better in this aspect: Fannie Mae and Freddie Mac have deep roots in Democrats leadship.
(Video by LATimes: anxious customers on day 2 of IndyMac Fed takeover)
China, Japan, Korea: not only China helped the US inflationary pressure by selling cheap goods to Wal-Mart or Best Buy, China also used the money buying tons of US treasuries and mortgage papers. Combined with Greenspan’s low rate policy, US consumers have access to cheap money until the bust. Same blame goes to Japan and Korea.
US consumers and mortgage bankers: consumer not only “shop until drop”, they bought into this “home ownership” idea, and they were told “house price will only go up” by the media and mortgage bankers. They bought the houses they can not afford, or should not buy at first place.
Wall Street: this is actually where the party started and ended. All the actors mentioned above are sidekicks compared to Wall Street: investment bankers package the mortage loans and make them look like high quality loans; rating agencies put “QC passed” label on those loans; hedge fund traded those hot potatos, made money from it until some people decided to leave the table (April 2007). The music stopped, there are not enough chairs for everyone; the tide receeded, we found many wall street firms were swimming naked.
Henry and Ben are doing whatever they can to have an orderly exit. The show continues…