The Fair Society: The Science of Human Nature and the Pursuit of Social Justice, by Peter Corning

[Donnachaidh]

http://www.opednews.com/articles/A-Review-of-The-Fair-Soc-by-Walter-Uhler-110615-427.html

In order to churn the sale of houses on Main Street and securities on Wall Street, thereby gobbling commissions and fees, investment bankers, mortgage lenders, rating agencies, real estate agents and insurance companies conspired to inflate a highly profitable housing bubble by peddling risky sub-prime mortgages and then bundling them with other mortgages, in order to create high yield residential mortgage-backed securities (RMBS) -- later packaged as collateralized debt obligations (CDOs) -- for Wall Street's investors.

Perhaps "conspiracy" is too strong a word. Let's just say that Adam Smith's "invisible hand" was at work. As Smith wrote in The Wealth of Nations, "Man is" led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it."

Unfortunately for millions of Americans, this was one of those supposedly infrequent times when the unbridled self-interest of a few was worse for the "society that was not part of it." In fact, it was disastrous for the entire country.

When a sufficient number of homeowners defaulted on their mortgages, the housing bubble collapsed. So did the stock market, bringing a massive loss of paper wealth in its wake. The collapse precipitated an economic death spiral which included a run on banks, a freezing of credit, a drastic reduction in consumer spending that caused a downturn in business activity that caused massive job losses that resulted in even less consumer spending, less business activity and more layoffs ad nauseam. The death spiral starved states, cities, townships, and schools of essential tax revenue.

More at the link --