Quote Originally Posted by carl View Post
No, what I understood Dayuhan's main point to be was the gov establishing perverse incentives. In my view that sort of institutionalized moral hazard.
Really? You understood "the perception that if you pool enough dubious loans together they somehow cease to be dubious" to be about government establishing perverse incentives? Because, wow. That's not at all what that phrase means.

Quote Originally Posted by carl View Post
I do too understand stuff. Honest. I understand the offsides rule in soccer/football and I understand why when the Kuwaiti team long ago tried to depend on that they ended up failures. So that is something.

The gov was watching what was going on. They were watching very closely to see that what they figured were enough of what the lending institutions had formerly figured were bad loans were being made to people who were poor credit risks. Then when those people couldn't pay, a predictable event, things fell apart.
Yeah, see, you can say you understand "stuff", but when you're flatly ignorant of the role the ratings companies played? That indicates that you actually don't understand stuff.

Regardless, that's twice you've shifted goalposts in a single page, which is more crap than I'm willing to deal with.