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Believe It Or Not, They Have Found Another Way To Blame Poor People
University of Texas at Dallas economist Stan J. Liebowitz drops a huge bomb on conventional wisdom about the real estate bubble: This has not been a "subprime" mortgage crisis at all. In fact, subprime mortgages in some categories are still not defaulting at record-high levels.

Instead, by far the most important determinant of default -- and the common feature of nearly all defaults since 2006 -- is whether the mortgage has an adjustable interest rate:

The mortgage data do not suggest that subprime loans went bad first, followed by Alt-As and then prime loans. Instead, the data suggest that adjustable rate mortgages (ARMs) went bad first, with the rise occurring at about the same to for both prime and subprime ARMs. Foreclosure rates on fixed rate mortgages (FRMs), both prime and subprime, barely participated in the foreclosure outbreak, having much smaller and much later increases in foreclosures.

To understand why this is important, please consider how widespread the belief in the subprime crisis really is. The president believes it. The media believe it. I believed it, and if you want to play gotcha on me, here's your chance.

I can not speak to the quality of Liebowitz's data, which are drawn from the Mortgage Bankers Association's National Delinquency Survey. But the case he puts together is pretty damned interesting. And it makes intuitive sense: If you're flipping or buying a second home or betting on the come, you want to reduce your short-term exposure. And we already know that being underwater on a mortgage is the primary factor in the decision to default....