Continuing from my previous post.
So, the housing party is over in 2008. Why, well for one thing the model that home prices always goes up didn’t work anymore. Those people that really should not have received a mortgage, could not make the mortgage payments and ended up having to sell their homes. These homes were sold for a loss. The banks could not absorb the huge losses, so they needed to be bailed out by the government. This took an immense toll on the economy, which we are still paying for and experiencing.
The decisions to relax the lending policies leading up to the 2008 crisis, while morally acceptable from a consequentialism philosophy, were ruinous for the American economy as well as the rest of the world. The deontologists could not be blamed for they were simply dutifully obliging the White House in its policy decisions. The virtue ethicists, most likely mindful of the risks to the changes in the lending policies, were no where to be found, lacking any courage to speak up about the unintended consequences of the policy actions.
Final thoughts in my next blog.