As the real estate market in the US unwinds, the NY Times reports on a cross-country blame game:
What used to be a profitable partnership between subprime lenders and Wall Street banks has now degenerated into a cross-country blame game.
Lenders in California say big investment banks encouraged and pushed them to make risky loans. On Wall Street, bank executives say mortgage lenders became sloppy and did not pay enough attention to fraud. Whatever the cause, Ownit provides a vivid example of what went wrong.
So, who is to blame? I think that the real problem is the dollar liquidity, and the real estate bubble is just one result of it (there must be others since we still don’t know why there’s no inflation from the on-going monetary expansion). Probably both sides acted more or less rational, given the situation they were in.