The “This American Life” podcast called “The Giant Pool of Money” on 5/11/08 made the point that since 2000, the global pool of money looking for places to invest has doubled, from about 35 to about 70 trillion dollars. So there was a huge demand for investment vehicles, and it lapped up things like mortgage-backed securities.
Isn’t it possible we’re now paying for the education of both those new, naive, global investors and the brokers, firms and homeowners who couldn’t resist the cash and were also naive? And now many of the relevant parties are overreacting in the other direction?
It seems like we should be directing some press coverage and efforts to surface these points, and shine more light on the naivete of the new global investors. There are many parties to the crisis, including regulators, brokers, agents, wall street, home buyers, investors and others.