Credit default swaps (uncovered insurance instruments) collateralized debt obligations mortgage backed securities and a whole long list of products the average person never heard of.


The adjustable rate mortgage was invented for qualified buyers in the inordinate rate environment of the 80s that had no choice but to have rates come down over time. It was never intended for no doc no incone loans in a rate environment that had no choice but to go up over time.


The government decided that housing shouldnt be subject to market forces. Math will out.


In order to increase leverage and fund the more COMPASSIONATE view of housing wall st invented all the cool economic wmd listed above.

---