Now let’s forget about 2007 for the moment and look at what’s happening today.
What are the banks that are still handing out zero-downpayment loans thinking? That no matter what happens, they will be bailed out on the public dime and get huge bonuses as a result. And they are right because that’s exactly what happened in 2008 and what will happen again. It’s extremely cynical, totally disgusting and just vile on their part. But it’s reasonable in the sense that they know they’ll make out like bandits and suffer no consequences. They are bad people but they are reasonable.
Now can anybody explain to me what those folks who keep taking out those mortgages right now are thinking? There has got to be some reasoning going on. They’ve been around for the past few years, have watched TV, probably even seen a couple of newspaper reports. So how do they justify this to themselves? They have got to know that nobody will bail them out, that if they sink nobody will care, that no politician will care about them and champion their interests. I’m sure they are all good people but what they are doing is not reasonable. And this complete lack of reason terrifies me a lot more than any purposeful badness.
When you are dealing with horrible people who are still being guided by reason, you can at least figure out what reasonable principles guide them and adjust your behavior to minimize being damaged by them. But people whose logic I cannot grasp scare me even if their intentions are good, kind and wonderful.