I was thinking about your point the other day when I was on dialysis, and wondered if the funds managers didn’t buy these CDS instruments to not only hedge their bets, but to protect themselves from lawsuits later on blaming them for losses related to the poor mortgages on their books.
As long as you have a hedge you can fall back on, your investment isn’t so dangerous. And with the stock market performing at only a mediocre level, real estate was the smart investment. Every fund manager would have to have invested in the “right” market at the time or be called stupid or negligent.
So here’s another point of guilt for the left wing - out of control lawsuits threatening every aspect of life, and perhaps irrational measures designed to protect oneself from these outrageous lawsuits.
Good points, but I think it was mainly greed out of control.