This will be my last comment on The Big Short.

A poor man’s field may produce abundant food, but injustice sweeps it away. – Proverbs 13:23

It’s sad how the biggest scam and fraud of the world, the real estate bubble of this decade, seems to have harmed the poor especially. They were the ones who, according to this book, took out mortgages beyond what they could afford. Then, when prices went up, instead of focusing on paying off their debts, they were encouraged to access the equity and continue spending. They were signed up to ARMs (adjustable rate mortgages) where, after two years, rates went up significantly.

Who did this? The first line was mortgage brokers. The second line was American banks who took the mortgages, packaged them into mortgage bonds, and sold them to investors. They sold the ARM increases as asset, assuming that investment returns would go up. Instead, they turned into a liability, as mortgage holders defaulted when they could no longer pay.

So the poor lost their homes and the investors lost their money. The brokers and the bankers didn’t lose anything, even though they perpetuated the fraud.

It was unethical, but not illegal. No one got charged, and I’m not convinced the system has been fixed.

Peter Scholtens