Mitch, you left out the part about Justin Fox being an idiot.
Only a complete moron could write, “Our society failed spectacularly this decade at solving the problem of how to price houses and mortgage bonds.”
No, we concocted precisely the housing and mortgage markets policymakers and consumers wanted — free or nearly free money such that just about anyone, anywhere could buy $300K worth of house. From the tax code, to bank regulators, to Fannie and Freddie, we opted to build a giant banking Ponzi scheme.
All it took was an oil shock and a couple of Wild West wheeler-dealers in Countrywide and Golden West to send the whole thing woozy, finished off with a subtle nudge from fraudulent credit default swaps. More specifically, the problem was not the price of housing or mortgage-backed securities or CDS, it was their value.
We convinced ourselves that intrinsic value did not matter, that all we had to do was “solve” the “problem” of prices to make the numbers “work.”
Fox does not even know that he is part of the problem is attempting to describe.
