I remember the day when in 2005, my ex-wife and I bought our second home in Phoenix using the no docs loan route.

We “qualified”  with a $5000 downpayment for a $280,000 loan. Once we included some nice furniture and a pool, it increased the grand total to $310,000. This was in addition to the existing mortgage on our first home where we has a mortgage of $180,000.

I didn’t understand how we had managed to get the luxury lifestyle that normally comes a little later on in life. I thought things through a lot for a couple of weeks and realized that if the tide turned on the housing market we could be out of one if not two houses.

We decided to bite the bullet and lose the $5k downpayment whilst we were still able to get out of the contract.

How many others looked in the mirror?? A very very small number indeed. So small that it is bringing down the banks, insurance companies and investment banks that repackaged the loans and sold them as securities against other loans.

Now everyone is pointing fingers. Finger pointing has never solved anything. Nor has the branding of a government led intervention plan helped, be it called bailout, stimulus or recovery plan.

Until the toxic loans will be drained out of the economy, continue to expect the markets to let gravity do its thing.