"We Are All Subprime Now"

The absolutely fabulous Tanta over at Calculated Risk outdoes herself* again, simultaneously smacking around the new WallMurdoch Street Journal and explaining in full-on geeky but still nicely accessible splendor just WTF has been going on in the business press with the reporting of the mortgage crisis. Hint: they're still racist jackholes. I know— you're so surprised.

Here's the concluding paragraph, but go read the whole thing:

The bottom line is, as CR notes, that "high-risk" lending was everywhere in the boom years. Of course there is a desire to collapse it all into the easy category of "subprime." And there has for a long time been a lot of political pressure to keep the association of "subprime" and "urban minorities" in place, because it has functioned as a good excuse for the subprime lenders (they "help" the poor and minorities, remember?). My view is that a whole lot of parties are very interested in maintaining rather than seriously analyzing a lot of faulty assumptions about risk, rates, and borrower credit characteristics. If this ain't "just a subprime problem," then an entire debt-based economy in which even the middle and upper middle class cannot afford homes given RE inflation and wage stagnation is suddenly in question. The last thing certain vested interests want to hear is that, basically, "we are all subprime now."

Tanta, you're my freaking hero.

* I think I got the gender right, but apologies if I screwed that up.