The house and senate passed the bailout bill today, which will save the American Way of Life; that is, allowing us to keep borrowing money to buy things we want. Now that it's resolved, we can get back to the interesting question of "who is to blame?"
There are really five players in what has passed for the home mortgage value chain.
The Homeowner: They want to borrow money to buy a house.
Man is basically lazy. Innovative and complex incentive and disincentive structures must be continually created and refined to compel any desirable behavior (including the absence self-destructive behavior). Excessive gaming of the system will be employed at every opportunity to avoid doing anything resembling work. - Equity Private
1) Who makes money in the short term?2) Who makes money in the long term?3) Who owns the risk?
Potential Market Play 1: Take on the risk, but only if it's commesurately balanced with the long-term reward, behaves on the efficient frontier of return, is completely understood, can be insured against external risks, and is aligned with the asset class allocation for your particular needs.
Potential Market Play 2: Take the no-risk, immediate upside choice, and flog that baby for every red cent you can squeeze out of it before it blows up.