The subprime crisis has dominated financial thinking lately including taking a few CEO scalps amongst banking companies. Why are we surprised? It was a high risk venture predicated on house prices rising forever. Those that take those risks should be able to accept them.
Government is not there to bail out those risk takers. Between the Greenspan/Bernanke put and now the Bush Administration negotiating that subprime mortgages not go to the higher interest rates for another three years - we have massive interventions into the allocation of risk and reward.
They are making the market fail. (more)
