They could have know - should have known - what they were getting into. I saw a prospectus by Goldman Sachs for one of their Mortgage-Backed Securities salamis. There were 40 pages expalining in loving detail the risks for each tranche, including the possibility of a housing downturn.

People chose not to read these, or to ignore them.

Now, that the system pushed everybody in that direction is a reality, and a smart policy decision would be to change that system, but people still chose to follow the herd.

In the long run, we're all dead. John Maynard Keynes