Great minds...

Sunday Telegraph 15 March 2009

The credit crunch was not unforeseeable, nor was it an act of God. It was caused by US sub-prime mortgages only in the sense that the First World War was caused by the assassination of the Archduke Franz Ferdinand: these events were the trigger, not the cause. The underlying cause of the credit crunch is unsuccessful speculation by large banks in wholesale money markets.

Conservative Party Reptile 15 December 2008

There have been two distinct phases of the current recession, related but distinct.  The first was the rapid and dramatic contraction in financial liquidity.  Everyone knows this happened because of sub-prime.  Which is true, in the same way that the First World War happened because of Gavrilo Princip.  What ‘sub-prime’ is used to mean is a short-hand for the popping of the US housing bubble.  Every country has always had dodgy mortgage loans.  So long as house prices are going up, these don’t matter.  Or at least can be said not to matter.  What was different this time was that the international financial sector had discovered a way to commodify financial products in a way that hadn’t been thought of before.