Long before the recession, the key players knew what was "going down" and participated in seeing that it did. After this "sting" was played-out, trillions of dollars of assets changed hands at deeply discounted prices. Enemies were punished and the faithful were rewarded. Long lists of direct beneficiaries include a long list of legislators.
In the movie, "The Sting", Johnny Hooker was shot by Henry Gondorff who in turn was shot by the fake G man. The mark had no route to retribution because Gondorff and Hooker were "voted out of office".
Prior to the 90-91 recession, the Fed kept one foot on the brake long enough to produce a similar result. This time, it took long-term planning and the cooperation of many. The timing of the mark to market rules was perfect for putting a strangle hold on bank lending just when it was time for the elite to buy.
Thirty years of steadily growing "injection" of low cost labor from the far east into our "system" has increased the supply of goods relative to the supply of money and thus brought inflation down. Housing has been very affordable primarily due to the resulting low cost mortgages. A readjustment was required when incomes were jerked out from under highly leveraged, bubbled, houses, but there is already evidence that a new bubble will develop soon after employment picks-up. Our laws favoring housing over all other personal investments have not been repealed.
Some of those who believe in the right of all to own homes, no money down and no credit established, are the naive stooges of the powerful. They played the Sting roll of the constable who was conned into doing the job of hustling the mark away. This con was well conceived and well played.
"I say Plenty, and long before most people had heard of CDS, CDO, or SIV."
- What Did the Regulators Know, and When?, Arnold Kling | EconLog | Library of Economics and Liberty (view on Google Sidewiki)