Where did the money go?
I've been hoping recently that someone would write a good article providing statistics on where the money in the current sub-prime lending crisis actually went. Clearly the banks ended up with a lot more defaults on their loans than they were expecting and it seems like an obvious question to wonder who actually ended up with that money. In the scenario where someone bought a house and then defaulted on the loan, presumably most of the loan amount went to the person who sold the house, or to the builders if it was a new construction. In the scenario where someone took out lots of home equity loans on their own house and then defaulted on the loans, presumably they spent most of the money on buying things, taking vacations, etc. Also, in both cases all of the people in the mortgage issuing business made some profit on providing the loan even if the lender they worked ended up losing money in the end.