But securitizing housing finance isn't in itself a bad thing.
> This massive failure is what created the need for bitcoin
How did the 2008 financial crisis create a need for cryptocurrency? How does it solve the problem of unregulated, high risk financial activity? How does it stop those things from tanking the whole economy? It would seem to make regulation even harder.
> rehypothecation
?
There's a big leap in that statement. Money is made up and "doesn't matter" (except that we choose to structure our society to pretend it does); what matters is actual productivity. If you want to solve the housing problem, you have to produce more houses; if you just throw money at the problem, the market will expand to consume all available money.
It seems like - maybe I misunderstand - you are dismissing money as a store of economic value; a means of liquidity of resources; and its essential, overwhelmingly powerful role in productivity, including real estate development.
In this case, the CDOs provided liquidity to mortgages, and that reduces the cost of buyer financing and increases demand for housing. In particular, they financed mortgages for people with poorer credit - generally less well-off people, the people for whom housing is an issue. Increased demand should attract resources to homebuilding, and result in more homes and lower prices for that market.
> the market will expand to consume all available money
Yes! We want the housing market to expand. ?
I'm not trying to make a philosophical point really - just pointing out that you can't get a honest picture of economic concerns if you think from the perspective of the finance industry.
In the end, you have more demand - including students who couldn't otherwise afford college - and more supply. Of course, colleges will anticipate that and increase supply before prices peak.
> it's hard to actually increase the supply
Why would it be hard to increase supply of homes or college educations?
> you can't get a honest picture of economic concerns if you think from the perspective of the finance industry.
Yes, agreed.
This massive failure is what created the need for bitcoin, a means in which to trap energy (you need to spend money to make bitcoin) and store/move it digitally, then you get the benefit of a visible record of transfers and stores.
As a silvergate, signature, and SVB customer they didn't hedge their t-bill duration risk properly, experienced a co-ordinated bank run and had to sell their assets off at a discount, making them insolvent.