The structure of the derivatives market is not obvious. The idea that home prices will always rise at the present level and you can just pay "less than my last rental" for a new house because handwave should give one a pause.
> And I'm telling you it wasn't, because no one saw it, not even the bankers and regulators, until it was too late
That's not true. A lot of people called it unsustainable at the time. A lot of people said there's a bubble. They were laughed at and shouted down, as doomsayers that are just to much of a buzzkill to let people just enjoy a new cheap house. A lot of people didn't buy into the bubble, because they correctly deduced it's not worth it. You don't hear about them for the same reason why the newspapers don't report there wasn't a murder - there's nothing to report. So you hear the stories of those who chose wrong and got hurt - because there's something to report there. But if a responsible family sees a loan too good to be true on a house they can't afford and walks away - you'd never know about it. But they exist. And there should be more of them.
> They were laughed at and shouted down, as doomsayers
That's a fallacy. With billions of humans, given any doom, someone was there to sling it. Because there is always someone slinging doom. You can't listen to all the doomslinging, because to first approximation it's all wrong.
The truth is we'll never know whether the doomslinging cranks were just cranks or geniuses. But the fact that they haven't gone on to further heights of analytical magic tells me they were probably just lucky cranks.
It's the same reason that every four years we learn about a douglas squirrel or whatever that has predicted the last 14 presidential elections. Because we don't hear about all the critters that didn't.
True, some of it just random. But some is not. There were reasons why that boom was unsustainable, and they weren't hidden. One can argue nobody knew how and when exactly the break will happen - maybe now, maybe in a week, maybe in 5 years - but it's not possible that everybody gets 0% no doc loans on any house and it continues forever. To figure out the intricacies of why it happened and how it broke, you need a lot of knowledge. To know it's not normal and there would be a point where it has to change - you don't need that much, and many people did. Discounting them as random cranks is not right.
> And I'm telling you it wasn't, because no one saw it, not even the bankers and regulators, until it was too late
That's not true. A lot of people called it unsustainable at the time. A lot of people said there's a bubble. They were laughed at and shouted down, as doomsayers that are just to much of a buzzkill to let people just enjoy a new cheap house. A lot of people didn't buy into the bubble, because they correctly deduced it's not worth it. You don't hear about them for the same reason why the newspapers don't report there wasn't a murder - there's nothing to report. So you hear the stories of those who chose wrong and got hurt - because there's something to report there. But if a responsible family sees a loan too good to be true on a house they can't afford and walks away - you'd never know about it. But they exist. And there should be more of them.