Neo-liberal, conservative economists are fond of blaming this crisis on ‘the housing market’. This way they avoid blame being laid at the door of financial de-regulators (central bank governors, finance ministry officials and elected politicians) or indeed of the finance sector. Instead the blame can be laid on those that took out mortgages, in particular those poor, desperate people in the ’sub-prime’ sector, for this crisis.

We must not internalise this propaganda. It was not the housing bubble that caused this crisis, it was the credit bubble. And the finance sector, encouraged by politicians and central bankers, created the credit bubble.

That is not to say that paying the mortgage is not the biggest problem that we, millions of ordinary people, face.  Of course it is.  But look at Hank Paulson’s solution. By denoting the problem as a ‘housing market problem’ he is proposing to bail out – not ordinary borrowers, worried about the roof over their heads – but the banks.  And he is proposing to write off their $700 billion of their  ‘mortgage debts’.  The trouble is that these debts are the least of our problems, when we look at the bigger picture of banks’ debts. ‘Illiquidity’ as the FT notes today ‘ has spread far beyond mortgage-backed securities’.

It has moved into the Credit Default Swaps market. Credit Default Swaps are a form of insurance against – default on a credit.