Panopticon explains the tale of Asset-Backed Securities (ABS), tranches of risk, Collateralised Debt Obligations (low tranche ABS) repackaged and marketed at higher ratings, Adjustable-Rate Mortgages, and No Documentation Loans. Making mortgage loans was really profitable, the federal government wanted home ownership made more accessible, and real estate prices only go up, after all. What could possibly go wrong?

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Hat tip to Karen L. Myers.