Plenty of people forecasted the housing collapse. I have been following a couple of housing blogs for four or five years that were culling articles and collating data from the most bubblicious areas from around the U.S. and in other parts of the world. We though it would pop years ago due to the average house price being 4,5,6 or more times median household income.

What blindsided so many of us was that so many financial institutions who were writing this bad paper were also buying this bad paper?!! How in the hell did they not know what they were buying? I am/was a lowly flooring installer and I figured it out in 2004! Went to buy a property and the prices had jumped and I couldn’t make the numbers pencil out to buy/hold/rehab/sell in any combination. I kept seeing acres of granite(@$110+ lin. ft.), Plasma tvs ($5000+ back then), and $12,000 Viking stoves popping up everywhere. Then I went to buy a used truck (after wondering how all of those guys in construction could afford $50,000 new trucks) and the salesman said “would you like 2.9% financing with nothing down and no trade-in on your used truck through Bank of America for 48, 60, or 72 months”! I said “sign me up for 6 years” and all of the pieces fell into place: the banks were giving money away to all takers. Hence the toys everywhere and the run-up in housing prices.

I find it damned hard to believe that actual finance types in business or in D.C. politics never saw any of the charts we saw showing the credit bubble.