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The economy was not as much "looted" as it was artificially inflated
with easy money and subsequently that bubble popped.
The "trillions" that disappeared from the economy never really existed
in the first place. There were 20 years of bad political decisions
that led up to that. There is plenty of blame to spread around. Wall
Street was just doing what the government told them to do.

I respectfully submit that may be backwards. I think it was the
government
that was doing what Wall St. told it to do. The system was set up so
that
Wall St. made money even when a house was sold to someone who probably
couldn't make the payments. They got fees, commissions and more fees.
Sadly, the states made loads of money in real estate transfer fees, real
estate taxes, etc.

They were trying to stimulate the economy and what is forgotten here
is the guy who sold the land made money, the builder made money, all
of the contractors made money, everyone in the building supply chain
made money, the real estate broker made money and the mortgage broker
made money. That is a lot of money moving around. It wasn't just Wall
Street. All Wall Street did was create the money in the first place.

Again, respectfully disagree. They were the ones that were rolling up good
mortgages with bad ones and then selling them off to investors, collecting
fat fees and passing the seriously underrated risk onto the purchasers of
those collateralized debt obligations who couldn't even tell what they had
bought and were unable to remove the bad debts from the ones likely to be
repaid. We've had real estate bubbles before but they never got anywhere
near as bad because in the past, there were no CDO's made up out of rolled
up mortgages in the picture. It's about the same as getting a bag of
potatoes that you can't open before you buy that contains a lot of round,
brown potato-like rocks in it.

Rating agencies gave AAA ratings to very toxic mortagages that turned sour
and brought the housing market to its knees. The appetite for more and
bigger mortgages (and more and bigger fees) was insatiable. Without the CDO
market driving the train, the bubble never would have grown to the titantic
proportions that it did. Everyone wanted in on these CDO's because American
homes were considered bedrock investments.

Wall Streeters - specifically investment banks - thought they were making
risk free money for two reasons: First, they thought defaults could be
foreclosed and sold for even more money in an (apparently) ever-rising
market. Second, they took their cut and passed the risk on. What they
didn't realize was that with enough foreclosures, the market for houses and
real estate (more than half the crash involved business properties) would
freeze up solid. AIG wrote "insurance" on such vehicles and when they went
sour, didn't have the proper reserves to cover the losses. They also were
locked into contracts that said the worse things got, the more they owed.
Those "snowball" clauses need to be closely re-examined because they didn't
really protect against risk the way they were designed to. They just
accelerated the decline. So we taxpayers were forced to.

The losers were the last person to own the house and the people who
held the loans when the music stopped.

I agree - the last man standing got the biggest shafting. Tthe middle class
took it on the chin and is still taking it, hard.

The derivative holders were
made whole by TARP and everyone involved in the house before the crash
took their money and ran.

I can't speak to how "whole" the derivative holders were made, but I will
agree that they probably made out a lot better as a class than the poor
shmoes who bought at the height of the market. My belief that they weren't
made completely whole stems from the multi-billion dollar lawsuits still in
progress against the sellers of the CDO's.

FWIW, the homeowner across the street that rented out to crack dealers spent
his entire inheritance buying a house for $450K at the market peak that's
now worth about $300K and became so desperate for renters that he took
Section 8 clients. They destroyed his house and it's vacant again and when
people come by and ask who lived there before they run. It's unfortunately
not unusual for previous drug sellers and buyers to come back looking for
the previous tenants, sometimes with a grudge to settle.

--
Bobby G.