Did You Buy Real Estate In the Last Ten Years?

If you did, and your Loan-to-Value ratio was over 80%, you were obliged to buy mortgage insurance against default (with rare exceptions if you were wealthy.) Of course anyone who cannot put 20% down is probably a poor credit risk, hence the requirement.

Now, this mortgage insurance for these risky people was concentrated largely into one big insurer, called AIG. The reason AIG folded is largely its inability to to cover the losses of all those defaulting loans. AIG also took premiums for title insurance, liability, and many other consumer protections. AIG certainly collected tens of billions in premiums, and spent those premiums on, what, massages and politicians... but now those who paid the premiums have a failed company as their safety net.

In a free market, consumers are more skeptical and look a little closer at offers.

In a free market, insurance companies refuse risky business, which dissuades people from engaging in risky acts. When govt regulates insurance, the insurance companies understand that ultimately the government will assume all risk, and in the case of AIG, this is true. Party On!

Here again, no responsibility or freedom. No one has to take responsibility for their risky behaviour (the results are called 'tragedy") and no one has the freedom to cut a side deal that avoids false hope. Try buying a house without title, flood (in flood zone, another amazing scam...) or homeowners insurance... ain't gonna happen (if you ain't rich).

The heart of the problem is lack of responsibility. The inability to get out of this is lack of freedom.

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