People are starting to realize wonder where all the money was pissed away to. The answer, of course, is that most of it was pissed away on affirmative action loans to members of protected minorities. Whose fault is this?
Steve Sailer blames primarily Karl Rove and George Bush
There is much truth in this, but I would primarily blame Basel.
Under Basel, what matters to a financial institution is not whether its assets are safely invested, but whether they are officially declared to be safely invested. The people in charge of deciding what is officially safe have no incentive to make their estimates accurate, but powerful incentives to make their estimates politically correct.
[an earlier version of this post incorrectly said Basel II, for which I was called out in the comments. Most of the problems started with Basel I]
Basel was not implemented until 2008. The loans that blew up were drawn up several years before that. How could Basel possibly be the cause?
Basel I, or Basel 1 and a bit, or just plain Basel, was implemented well before 2008
The bit of Basel that most directly contributed to the crisis was the 2001 recourse rule – that mortgage backed securities rated AAA required a very low capital cushion, which very strongly pressured banks to buy utter shit provided it was rated AAA.
Now it has been proven back in 1975 that the rating agencies were entirely disconnected to reality, though intimately plugged in to politics, so this rule had a predictable effect.
Basel was not implemented until 2008. The loans that blew up were drawn up several years before that. How could Basel possibly be the cause?
Basel was implemented well before 2008. Basel II continued everything that had gone wrong and tried to keep it going, unsuccessfully attempting to postpone the crisis.