Who we are

Toxic assets are simply bad loans--at least there was a time when that is what they were called. The English language gives us this kind of slight-of-hand, to avoid the more accurate term: propaganda.

Before we do some numbers, let's see how we arrived here and where we stand.

• Relative to inflation, housing prices rose twice as fast over the last decade or so.
• Freed from New-Deal controls, banks competed all-out for the market. Part of their strategy was to buy and sell mortgages. Some even emulated a Ponzi scheme. Others dared unfamiliar territory out of sheer exuberance.
• When the law of supply and demand asserted itself, the whole phony edifice came crashing down.