True enough, as far as it goes, giving you some room for ‘expansiveness’ on a couple of points; it was important, but one of the single greatest? almost without interruption (as in, are you really calling the 2005-2008 period an economic boom? But still, point taken, generally.

Here’s my problem; how long was it before the pure pools of reasonably secure home loans (and no, I don’t mean perfect, I mean the usual grouping where 1 or 2 per 100 goes south due to the normal run of things) became polluted? I’m not an expert, but I think the answer is ‘not very long’, yes? It was, in fact, in response to the need to keep prying eyes away from the sludge that was being whacked together and called a ’security’ that Gramm and the boys did their little rereg magic in the late 90’s, with the full encouragement of McCain and his brethren, wasn’t it? Of course I fully recognize that Clinton and the D’s had their hands in their useless pockets.

It was the era when anything (anything!) that could be packaged up and sold as a security was, Enron was packaging up future water rights derivatives and natural gas drilling shares and other things made up of regular words, the combination of which made no sense.

So, yes, a decent idea, back in the day. As was junk bonds before it. But when people and institutions are buying badly labelled things they don’t understand or care to understand, and when they are (one way or another) playing with our money? So what?

All it really proves is that everybody is a genius when the market is going up.

Don’t forget that in addition to garnering income from yield spreads with mbs, there is also a great deal of fee income generated when making new mortgages. Gordon Gecko had it right — for a while.

I’m still reading but have to admit that I don’t always make it through the comments.