1.) Housing prices rarely go down, at least nationally.

The information on this graph has been known for a decade. Every refinance I did was carefully kept a long ways below the appraisal value. Even now, after my latest refinance (4.625% 15 year fixed! Yay!), I'm still at about 60 percent of appraised value.

2.) Default losses on large mortgage pools are not only low but relatively stable.

Normally, this would be true. But see #1.

3.) People don’t walk away from their homes, even when they’re under water.

Flippers do, or those who wildly overextended themselves. If you're making your payments okay, and live in the house, who cares what the sales value is? You'll still own the home when the mortgage is paid off.

4.) Regional housing markets are largely uncorrelated.

This was true many years ago, when the bank who made your first loan was the one that burned your mortgage when you made the last payment. I was amazed at how many times my loans got "sold." I've probably made payments on this house to ten different financial organizations.

I've read a number of things that lead me to believe that the people and organizations who set the "AAA" ratings on crap aren't getting checked out nearly as much as they should be.

The problem with nationalization is that government money is just as "funny" as the mortgage money was, based on even less collateral. The only difference is we don't have a choice about giving it a "AAA" rating. The laws of economics will still turn around and kill us.

The writer is good, but still seems to harbor that all-too-common delusion that once the government has absolute control, everything will just work beautifully. History shows otherwise.