From the highly reputable New York Times:

IT’S NOT JUST THE LENDERS There has been plenty of talk about “predatory lending,” but “predatory borrowing” may have been the bigger problem. As much as 70 percent of recent early payment defaults had fraudulent misrepresentations on their original loan applications, according to one recent study. The research was done by BasePoint Analytics, which helps banks and lenders identify fraudulent transactions; the study looked at more than three million loans from 1997 to 2006, with a majority from 2005 to 2006. Applications with misrepresentations were also five times as likely to go into default.

Many of the frauds were simple rather than ingenious. In some cases, borrowers who were asked to state their incomes just lied, sometimes reporting five times actual income; other borrowers falsified income documents by using computers. Too often, mortgage originators and middlemen looked the other way rather than slowing down the process or insisting on adequate documentation of income and assets. As long as housing prices kept rising, it didn’t seem to matter.

In other words, many of the people now losing their homes committed fraud. And when a mortgage goes into default in its first year, the chance is high that there was fraud in the initial application, especially because unemployment in general has been low during the last two years.

Wow. A fair and thoughtful analysis of the American economy by a leftist rag? Maybe the Grey Lady is changing for the better. Just kidding.

The article has some interesting tidbits on China’s supposedly booming economy so it’s worth a read, although his contention that no one knows why there is “income inequality” is disingenuous at best.

The middle class is becoming rich (thus why the middle class I shrinking even though the lower class is stable in size) and more money is being thrown around than ever. An honest economist could tell you income inequality in America is a bogus measurement of our economic health, it’s purchasing power, which even the poor have more of than the average European, that really tells the story.

But who’d support Marxism then?

h/t Hispanic Pundit