"This package of dodgy debts stops being a dodgy debt and becomes a structured investment vehicle." "Ah . . ."

In the spirit of easing into the week, an absolutely hilarious (and sometimes cringe-inducing) analysis of the sub-prime debacle:



As a side note, while my economic expertise is limited, to say the least, I remember a few years ago the problem of questionable mortgages being discussed in terms of interest-only ARMs. I remember reading about them and thinking, basically, that people wouldn't be able to make the payments on them when the payments ballooned simply because not everybody on the planet was going to be making way more money in just a few years (and, of course, the additional notion that not all people with ARMs would be able to flip). But it's not like all ARM buyers had bad credit -- plenty of the ARMs were to people with decent credit who were simply buying far above their (respectable, in many cases) means.

Which makes me wonder a little bit why the whole thing has been reframed as a "subprime" problem rather than one of the mortgage structures more generally, unless a much larger proportion of ARMs than I remember were actually subprime . . .