The Art of Tetman Callis

“With stagnant wages and booming consumption, the cash-strapped American masses had a virtually unlimited demand for loans but an uncertain ability to repay them.  All they had going for them, from the point of view of Wall Street financial engineers, was that their financial fates could be misconstrued as uncorrelated.  By assuming that one pile of subprime mortgage loans wasn’t exposed to the same forces as another–that a subprime mortgage bond with loans heavily concentrated in Florida wasn’t very much like a subprime mortgage bond more concentrated in California–the engineers created the illusion of security.” — Michael Lewis, The Big Short