A few other points:

1. Numerous no-doc loans were made to illegal immigrants. This was considered to be a feature, not a bug. Nearly all of these defaulted.

2. Other no-doc loans were made to owners of small "all cash" businesses who somehow drove Mercedes Benzes while reporting a couple of grand in profits each year (ie, they cheated massively). It was far from unknown for the owners of these businesses to themselves be illegal immigrants. These actually turned out fairly well as these guys aren't noted for overpaying or buying "too much house".

3. Yet more were made to people like me who had consulting jobs with irregular income (the LTV in mine was about 40%, but I still couldn't get a "doc loan" because I didn't have a W2 job). These are also decent loans unless the person overbought.

JLP: There Are No Lenders. You have the quaint idea that there was something called a "bank" that lent out its depositors' money to fund mortgages, after carefully qualifying buyers and doing extensive diligence on the value of the real estate in question.

In the glorious new world cooked up by Barney Frank, Chris Dodd, and Fannie Mae, that antiquated concept went away, to be replaced by "originators" who marketed loans to all and sundry. They did just enough information-gathering to get a magic number on the loan so it could be scored. Whether this information made any sense or not was irrelevant; only the "score" mattered. Once the loan was sold to Fannie Mae, it was split up into dozens of pieces, packaged, and sold again into a vast pool of badness sorted by "score".

The idea may have even worked, if the "scoring" had any basis in reality. The problem was, it didn't.

As for prosecuting people, since everyone in the chain had some interest in being deceived, it's hard to know where to start. And most of the loan originators went bankrupt, in many cases because many of them didn't realize they were in a massively crooked business and dove into the "can't lose" real-estate market they helped to bubble up.

Some - and probably most - of these brokers honestly thought they were helping people achieve their dreams of home ownership. If the money was great, that was wonderful too.

But you don't seem interested in actually engaging the arguments as opposed to ranting. So, as we say here in Cali, vaya con dios.

Actually, LOL, CA's going into bankruptcy for precisely that reason. Here's the math:

Let's say a billionaire makes $100M one year and $10M in a bad year. And taxes are 90%, just because this is LOL-world and billionaires in your world are so gosh darn patriotic. In the good year, King LOL collected $90M, and in the bad year only $9M. So, in the bad year, LOL's revenue fell by 90%. Since you have steeply progressive taxes, you aren't collecting much taxes from 100,000 bag boys to make up for that $81M loss.

And if you're like most rulers, you bulked up LOL-world's public bureaucracy to the point where you depended on getting that $90M/year, and now can't pay them.

CA's problem is twofold: taxes are too high in raw terms, and even more dangerously for public revenue planning purposes, the revenue sources are too volatile.

LOL, what is the point of these taxes? Do you want fewer billionaires, or tons of government cash?

If you want fewer billionaires, your plan will work splendidly; you'll drive the ones we've got away, and will guarantee that no new American billionaires appear with your confiscatory tax scheme. Since wealth is the ultimate engine of world power, you'll also insure that the US becomes a second-tier power to China and India.

If you want government cash, you should know that 100% taxes will collect zero revenue; after all, why bother to work if the government takes it all? Also, at zero percent, no taxes are collected. So, it should be obvious that there's some optimal point where taxes can be maximized - if that's a government goal.

A progressive tax structure is one that curves steeply, not "high" in absolute terms. A flat tax can be high if it's 50% across the board, but it's still flat. A tax structure can be progressive if it goes from 0% to 1%.

That's what "progressive taxation" means. And as for state tax systems, CA's income tax structure is the most "progressive" in the country.

Fairness questions aside, there are severe practical difficulties with steeply progressive income taxes. I live in California, where tax rates are massively progressive, and the problem that arises is a boom & bust in tax revenue. The problem is that wealthier people often have extremely variable incomes, so they'll be lots of taxes at the top rate in good times, but far less, both in absolute and relative terms, during bad times.

Of course, the government expands to the limits of taxable revenue (and more), so when the money disappears, it crashes hard. "Rainy-day funds" and such gimmicks don't work well since today's politicians have a huge incentive to raid them today and damn the consequences, due to term limits (another idea that doesn't work well).

Also, the idea that people won't move if subjected to 90% tax rates is goofy. Maybe the US got away with it during the Eisenhower administration, but the US was the only economic game in town in those days; Communism ran much of the world, and WWII had destroyed much of the rest. Today, those with high incomes are far less rooted to particular countries and much more willing to move - often maintaining residences in many countries. Changing their "tax home" is trivial.

Several Chinese movie-stars with American citizenship have relocated their "tax homes" to Singapore.

Anyway, enough on this thread. I regard taxes as a necessary evil to fund the necessary evil of government, and that they should be as low as possible. Government as a "charity with a gun" is an abomination and the bane of freedom.

MLR, nice idea, but how exactly do we do that? Very few government programs actually create more employment than leaving the money in the private sector, and once the program is created, it's nearly impossible to make it smaller; its administrators will fight fanatically to keep it, the people working in it won't want it to end, and - like all bureaucracies - it'll find ways to argue that ending it will cause the earth to smash into the sun. It'll get Congresscritters who get fat from offices in their home districts, etc.

This is the problem, and why it's nearly impossible to reduce the size of government short of near-revolution.

And "LOL": more taxes won't work either. Eventually, you raise taxes enough that the productive people quit being productive or emigrate elsewhere. And even if you get the taxes, you'll just get more and more government bloat and end up in the same position we are now.

Frankly, short of radical restructuring, I'm not sure how to "fix" the problem. One of my "radical restructuring" ideas would NOT be term-limits - we tried this here in California and all it did was make the bureaucracy and government unions even more powerful relative to elected officials.

One of my "radical" ideas would be what I call "the Congressional Death Penalty". We could have a national plebiscite that forces the entire Congress to stand down and not run for a period of six years or so (or maybe forever)? It would be replaced by a completely "freshman class" of Congresspeople, who wouldn't be beholden to ancient committee chairmen, prehistoric ways of doing things, etc.

This would do what term limits is supposed to do, but only if Congress is screwing up so badly that it must be institutionally "flushed". It would also make Congress far more responsive to national concerns.

You measure it by counting the number of rainbows Obama poops out and divide it by the number of unicorns he has hidden in the White House. You then multiply it by the number of times a media type calls him a living god (we're up to at least four that I can remember).

Priuses aren't much more expensive and about 3x bigger inside, big enough for four adults and a kid. Unless you live somewhere where the physical size of the vehicle is an advantage (ie, you often need to park in Manhattan), I'm not sure why anyone would bother.