Quote of the Day

I respectfully submit that the bankers--like the regulators--simply did not realize that this was the first-ever significant nationwide housing bubble. And they did not realize how fragile the bubble was, due to subprime lending. Meanwhile, the Basel regulators encouraged them to leverage into the bubble by buying AA- or AAA-rated MBS. That is the crisis in three easy sentences.

From Jeffrey Friedman. More here, including four more great sentences:

The crisis has ideological ramifications. So economists of libertarian bent want to blame it on TBTF. Those of leftist bent want to blame it on bankers greedy for bonuses. Is it so difficult to imagine, though, that both the regulators and the bankers, being human, were ignorant of what was to come?

I really do think that most people underestimate the role of ignorance in the crisis. It's a bit unsatisfying, because we like blaming enemies for bad events, but that doesn't mean it isn't true.