When we think of how the housing bubble almost wrecked the U.S. economy, we think in terms of those sneaky Wall Street bond traders and insurance companies like AIG; the type of people Michael Lewis writes about in The Big Short as greedy and oblivious to the apocalyptic scenario they were creating when they bundled all those subprime mortgage loans as CDOs and authorized credit default swaps.
And there’s a reason for this: we don’t like to think of the average American who took out those teaser-rate mortgages as being stupid or greedy themselves; they were just duped by a system that was either lying to them or too complicated to understand.
But that’s not entirely true. The human instinct, when presented with an option too good to be true, doesn’t necessarily act in his or her own best interest. Because this is America bitches, and if you’ve just won $7,500 in your office’s Super Bowl pool, the first thing you do is videotape yourself screaming about how you should be put on “IRS YouTube! Yeah!“ Read More