Isn't it ironic that

[Concillian]

We mere mortal Europeans were dumbfounded when we heard.

1: US banks take enormous risks
2: US banks go bankrupt
3: US Government saves US banks
4: US citizen pays for a: Mortage, b: Saving Bank providing mortage.

Where does the US gov get this money? The wars cost over a trillion, this bank saving scheme 700 billion.

Actually on 4) you have the smart and budget conscious US citizens paying for a) Mortgage andB)saving bank providing mortgage and people too dumb to figure out they couldn't afford their mortgage when they signed up for an adjustable rate mortgage in a time of historic low interest rates because they couldn't afford the payments on the fixed rate loan.

I have watched people at work foreclose, I have watched family members foreclose. Every one who I've talked to the story is one of two things:
1) They were too dumb to know what would actually happen with an adjustable rate mortgage once interest rates were no longer at historic lows and they couldn't just refinance again next year to continue the super-low rate.

2) In addition to number 1, they were SO DUMB that they refinanced a solid fixed rate loan that they could afford into an adjustable rate loan that also took equity out of their house so that their initial payment was about the same as their old fixed rate loan.

I know or work with at least 10 people who have had to foreclose and every one of them fits into category 1 or 2. None of them are sob stories about how they lost their job or whatever. No, these people are pure, unfiltered moron when it comes to financial planning. Ultimately, these people lose very little in personal worth, mostly because they didn't have much to begin with. Yet they are often causing huge impact on others with their really bad decisions.

Just an example of one family I know:
bought their house for zero down long enough ago that they were well ahead of the bubble. As prices rose, they were convinced by some dumbass that they should refinance to take money out of their house because everyone was doing it. They refinanced and pulled 50k out of their house that they had put zero down on.
Their loan was an "option ARM" that gave one option of paying LESS than the P&I. They didn't understand the loan at all, but the lowest cost option payment was about the same as their old fixed rate loan monthly, and that's all they really cared about. They were getting 50k and their payment was the same, so woohoo! Well they've been paying ~1k less than the P&I for a while now, and lo-and-behold when they're in financial difficulty and come to me for help sorting it out, they owe 150k more than they bought the house for originally.

Well of course I'm thinking they're nothing short of "how are you able to keep from drowning in your own saliva when you're that dumb?" but I can't actually tell them that, and now I'm this frustrated person wondering how many other normal college educated people I see around are really drooling idiots in disguise. I mean this was one house, and when it forecloses, it will be responsible for over 150k all by itself. The family will move into a rental they can afford and will suffer through a few years of bad credit, but really won't have to suffer much for making this decision.

Honestly, I used to think the online community in games like WoW and DiabloII were just a large percentage of total dumbasses just because it was an anonymous medium, and they could let their inner idiot free reign with no repercussions. But now I really wonder... I mean maybe that's not the case, maybe everyone really is like that and I have this sheltered community of friends where I don't really see it until something like this mortgage thing shows who the morons really are.

The banks have some of the responsibility here, and they will be the media scapegoat. They were qualifying everyone at the starting payment of these ARMs, even though they knew these loans would not stay at that monthly payment for long. However, I believe what we are seeing here is the maturity of American Idiocy. People are so dumb, they didn't understand understand the loans they were signing or were incapable of the financial planning that should be required to sign for a mortgage. These people are more to blame than the banks and are imploding the economy. Ultimately it comes down to a rather large percentage of Americans making really, REALLY bad financial decisions with large sums of money. And those of us who can make good decisions are the ones paying for those mistakes.