Signs of vicodin addiction. Vicodin user message board. Vicodin….

Subprime loans in and of themselves aren't a problem, obviously. It's like a loanshark – they have some unsavory features – but some people are willing to take that risk. The problem comes when you securitize these mortgages in an environment that is rife with asymmetric information, and pass it on to people who aren't aware of the risk. That's when it goes systemic.

The Brookings Institution has a new report called "The Origins of the Financial Crisis" that put some numbers on it – and my understanding is that Fannie and Freddie, while they did both subprimes and securitization – did not mix the two as heavily as other lenders did.

I can tell by your level of discourse that you are quite an intellectual. It would help your arguments if you were able to articulate the main points of the links that you give. Instead, you seem to hold their value as self-evident argument-enders. It leaves me to believe that you don't even understand what they are arguing, but that you merely see people who seem to support your ideological beliefs and count such endorsements as "evidence." However, you have presented no coherent story as to why the GSEs were the main cause of the bubble.

I do agree with some of the points made in the two links that you presented. I believe that the political atmosphere was conducive to the bubble. I'm sure politicians were patting themselves on the back when home ownership rates were rising. However, the CRA regulations didn't cover almost all of the largest mortgage lenders in the US. And, as I've mentioned before, I do believe that Fannie and Freddie added to and participated in the bubble to some degree. The favoritism given to the ratings agencies is also implicated, which I mentioned above.

The main problem with the arguments made in those links is that they simply align factors that help make their argument, while ignoring circumstances that don't support the thesis. This is a confirmation bias. I believe you suffer from this as well. Also, neither of those links even addresses the arguments that I've presented. The Independent one is reacting to "[t]he main answer that is being given, that unscrupulous lenders were taking advantage of poorly informed borrowers," which it correctly concludes "does not fit the evidence nor does it dig deep enough." This does nothing to address my points.

There is also no attempt to put the GSEs activities into perspective. No mention of market share over time for various types of loans. As a result, while we can conclude that they participated in the bubble, we have no way of gauging the magnitude of their impact.

By the way, you still have not answered how the GSEs and US regulations caused the housing bubbles in Europe. In fact, you didn't even seem to be aware of housing bubbles in Europe which makes me think that you haven't bothered to educate yourself on the matter.

The funny thing about this argument is that we're both arguing that it's the government's fault. However, I care about magnitudes and root causality. You seem to be interested in confirming your priors and name calling.

That the Boston Fed document is signed by Richard F Syron isn't a cause-and-effect indictment that Feddie and Frannie caused the housing bubble. Syron worked for the Boston Fed at the time, and the document even says that the suggested guidelines are not regulation (see my comment that quotes it above regarding that point).

Thanks for reminding me of why I seldom comment on this blog. Russ and Don are great, but there are definitely some commenters who need to learn how express their arguments intelligently.

And no, vikingvista, pointing out that the Boston Fed is privately owned does not make me a troll. I can't believe that you would read the comments between me and Mesa Econoguy and conclude that I'm the troll in this. I present facts, figures, and graphs. Mesa Econoguy types profanities. Anyway, you certainly have argued more coherently than Mesa Econoguy, even if I disagree with you. So congrats on that, for whatever it's worth…

O cripes. He is a troll. And here I was duped into attempting a rational debate.

Yeah, Dave, there’s no evidence that Fan & Fred were the cause.

Nah.

Do try to pay better attention, Dave.