[underground]

The market acts like a herd sometimes. This effect is magnified greatly when you have elected politicians and federal reserve boards that insist on acting like shepherds and treating the market participants as sheep.

As the regulation, interest rates, and subsidies change - the market sheep move in the direction their leaders have directed them.

In this case, right off a cliff.

[moneyrunner]

The effect of lending to people who could not afford their mortgages were masked for years by rising home prices and refinancing:

The belief was that home owners build equity in their homes by making regular payments that include both interest and principal. For most families, paying a mortgage is a forced form of savings. But this assumes home owners have the cash flow that allows them to build equity in their houses. Encourage those unaccustomed or unable to save to become home owners, and they are apt to refinance and take any growing equity out of their house to fund other expenses. In fact, that is exactly what happened.