L3, you might add that this time, when the liquidations came to be necessary, there’s no ready vultures as we have come to expect –they’re out there, but can’t get any financing. In a major asset-price deflation, capital requirements are best met by hoarding capital, thinks any half-prudent banker. the Bailout made no demand that banks lend –a mistake, it now appears –an omission.

And this election –would YOU as a banker want to enter contracts that promise to be soon enough subject to some populist judge’s re-write? And what do you think about your paying client, whose neighbor soon enough will get a big federal discount and softer terms on his troubled mortgage, while he continues working two jobs to service his similar contract?

Moral hazard is here, and will never again in our lifetimes be heard as some arcane philosophical abstraction.