Re: the "R' word
Omg! Please go do ur research. Like I've said already, any economist would beg to differ with you. I've given detailed explanations on everything. Yet you and CB repetitively say that the banks are the only ones to blame since they created the securities. Secondly, the banks didn't rate the securities, the rating agencies did. So there already you have two institutions to blame instead of only the banks as you proclaim.
The CDOs that you are referring to as bonds were one aspect of this crisis. Bit yet again I'm telling u to understand the reasons for the crisis. The crisis Would still definitely happen even if there were no CDOs!!!!!!! People were purchasing houses beyond their means because interest rates were low! The result of them purchasing these houses that they couldn't afford was the fact that securities backed by these payments became worthless. If homeowners were able to afford the payments, investors would still receive their yields and there would be no crisis. The main reason there is, is because interest rates went up, people couldn't afford to make their mortgage payments, incestors weren't receiving the money on their mortgage backed securities, so the securities became worthless, the market for these securities dried up, banks had huge assets which were these securities and they had to write them off and therefore credit dried up. Obviously this is a simplified picture for the layman to understand.
What I meant by the prescription example was that you should not blindly put your faith in a doctor just because you think he/she is the authority on medicine. They also don't regulate the medical profession. And you should also know what you are putting in your body even if that means reading online about it.