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...money? There was little fear of buying a house with nothing down, because housing prices, we were assured, only go up. And there was no fear of making mortgage loans, because what analysts call "house-price appreciation" would increase the value of the collateral if borrowers couldn't or wouldn't pay. The idea that we'd have house-price depreciation - average house prices in the top 20 markets are down 15%, according to the S&P Case-Shiller index - never entered into the equation...

Author: /time Magazine | Title: How Financial Madness Overtook Wall Street | 9/18/2008 | See Source »

...were bought by foreign central banks, which wanted to own dollar-based securities that carried slightly higher interest rates than boring old U.S. Treasury securities. A big reason the Fed and Treasury felt compelled to bail out Fannie and Freddie was the fear that if they didn't, foreigners wouldn't continue funding our trade and federal-budget deficits...

Author: /time Magazine | Title: How Financial Madness Overtook Wall Street | 9/18/2008 | See Source »

...heard, of course, that subprime mortgages - subprime is Wall Street's euphemism for junk - are where the problems started. That's true, but the problems have now spread way beyond them. Those predicting that the housing hiccup wouldn't be a big deal - what's a few hundred billion in crummy mortgage loans compared with a $13 trillion U.S. economy or a $54 trillion world economy? - failed to grasp that possibility. It turned out that Wall Street's greed - and by Wall Street, we mean the world of money and investments, not a geographic area in downtown Manhattan - was supplemented...

Author: /time Magazine | Title: How Financial Madness Overtook Wall Street | 9/18/2008 | See Source »

...feel about your brother Stephen's conversion to Evangelical Christianity? -Nicolas Christy, Austin, TexasIf it wasn't political, I probably wouldn't have anything to say. But the Evangelicals who say AIDS is payback for homosexuals-you don't see liberals saying Hurricane Ike is payback for the Bush family living in Texas. I think that my brother really is very devout and very dedicated, and none of that bothers me until it becomes political...

Author: /time Magazine | Title: 10 Questions for Alec Baldwin | 9/18/2008 | See Source »

...then, Pelosi realized she was on the wrong side. She had previously told one interviewer that she wouldn't budge on drilling because she was "trying to save the planet." But a senior aide says that when Barack Obama came out in favor of a pro-drilling compromise emerging in the Senate just before the August recess, "she realized she was going to have to support...

Author: /time Magazine | Title: Democrats Join the 'Drill, Baby, Drill!' Chorus | 9/17/2008 | See Source »

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