The Lewis article is great, and as the friend who sent it to me said, explains why the crisis is so much bigger than the amounts of the mortgages themselves.

I'm sticking to my idea, though, that the fix has to happen in housing. The environment of the last few years, in which our elected representatives not only legalized trick mortgages but also made it legal to bet against peoples' ability to make their payments, has stolen away the idea that there's safety and prosperity in home ownership.

That's a big wrong, and one that I think has to be redressed before anybody is going to be able to move forward. Elephant in the living room, blah blah blah. Ordinary people aren't economists, but they know when they're being damaged beyond repair and so do people further up the ladder. If the the relationship between lender and debtor is so messed up that the only ways to find stability in America are screwing other people and winning the lottery, you can understand why nobody's moving forward with business initiatives of any kind.

In the end, my argument is psychology, not economics. But if you want to know why nobody, not even the smarty-pants banks, wants to loan money to anybody, I think you only need to look at the foreclosure crisis for the answer.